Starting a Bakery or Coffee Shop

The Indian market has seen a massive make over in the way bakeries and coffee shops are being set up. The façade and interiors of bakeries and coffee shops have evolved to appeal to a larger segment of the young and affluent crowd. It’s not just the ambience but also the variety of products have seen a rise due to increase in demand. With rising demand and an increasing middle class, it is a great time to start a bakery or a coffee shop. In this article, we look at the process for starting a bakery or coffee shop in India.

Types of Business Model

Before starting a bakery or coffee shop, it is important to decide on a model for the business. The following are some of the types of business model:

A stand or shop in a high footfall area, where customers walk in and pick up their baked goods. A good example would be airport food counters.Franchisee of a popular chain like Cafe Coffee Day or Dunkin Donuts or others. Custom baking and delivery of baked goods to customer place. Ideal for women entrepreneurs interested in baking and operating from home.Stand-alone bakery or coffee shop.

Location & Ambience

Choosing on a location is a crucial step in starting a new bakery or coffee shop business.  Unless the business is a home based bakery, the location of the business would have tremendous impact on the success of the business.

Hence, it is important to choose a high-foot fall area with a floating population or a captive population. Home based bakeries and stand-alone bakery or coffee shops do well in areas with a captive population (e.g: Apartment complex or township), whereas a coffee stand or franchise chain would do well in an area like a airport with high floating population.

Setting up the right ambience plays another important in the success of the business. Upscale bakeries and coffee shops are mostly frequented by affluent youngsters. Hence, it is important to have a hip atmosphere with facilities like clean washrooms and high-speed internet to ensure the customers visit or stay in the premises of the business for long-times.

Business Registration

Once a location is decided for the bakery or coffee shop, the necessary registrations must be obtained from the Government and regulators to start business. It is recommended that coffee shops or bakeries with less than Rs.40 lakh of annual sales turnover start as a Limited Liability Partnership (LLP) to avoid audit requirements; whereas, a chain of coffee shops or coffee shop with an annual turnover in excess of Rs.40 lakh of revenue, start as a private limited company to ensure scalability and transferability.

After obtaining business registration, tax registrations must be obtained for the business. Both, service tax and VAT would be applicable for air-conditioned coffee shops or bakeries that serve food products. Based on the State in which the business is located, VAT registration must be obtained from the local sales tax department, while service tax registration can be obtained online.

In addition to the business registration and tax registrations, a coffee shop or bakery would also require a FSSAI license to operate. Coffee shops and bakeries typically require State FSSAI License and the requirements for obtaining State FSSAI License can be learned here.

 

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