# Opening new bakery...



## backtobasics (Apr 25, 2016)

Hi all. I'm putting together s business plan to branch out on my own. Any advise welcomed, but my specific question is the old chicken or the egg... Meaning I have a niche market & location selected, available spaces are difficult to come by. I don't want to loose the space, but I don't want to sign a lease without knowing I will get all the needed permitting to convert space into a kitchen. Any insight?


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## someday (Aug 15, 2003)

I would leave the word "niche market" out of your business plan. 

Hah, just kidding. 

I would think the first step would be to contact the zoning department in whatever city you are located in. I would honestly think that any real estate agent would be able to help you with that, and I would also think that most real estate agents would know what properties are zoned and permitted for what purpose. 

I think you just need to do your due diligence and make sure you NEVER sign a lease for a business like that without a lawyer looking at it. 

I'm sure even just research on the website for your town or city would give you the initial information to get the ball rolling, and who to call, etc. 

Are you already looking at properties even before you have a business plan? 

Also, there are probably hundreds of books out there that cover the logistical basics of opening a small restaurant or bakery or whatever. Amazon and.or the local library could be your friend.


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## panini (Jul 28, 2001)

Most building codes are pretty much the same for most all businesses. If your in the States that usually requires submitting plans to the local P&Z. One approved then it is in you best interest it make contact with your local health department. This set up is very common here. Submit your plans and they will respond with all changes that nee to be made to meet health codes. This is probably one of the biggest mistakes when opening a food service operation. Most people will put their trust in the hands of a contractor, even one who specializes in restaurants and kitchens. Never, I repeat, never take you contractors word on anything! If you get your building permit approved and don't run it by the health department(which most people are afraid of for some reason), 90 percent of the times you will end up with a punch list from the health department that will not only be bigger then you original plans but 5-50$ more costly to make. Your CO is not that hard to receive from the city, unfortunately you cannot open with out the Health Departments CO.]

Contractors are valuable, but only should be viewed as a tool to achieve your concept. In all my years I don't think I've met someone who relied on their contractor for everything and have seen success without a lot of collateral headaches and BS.

Anyway, that's how is goes around here. Where you are may be complete different. I've learned through opening 6 places and consulted on many more. Also some food for thought. The Health Department is not your enemy. Most of the horror stories stem from owners making changes without notifying them, so of source they enter the business with a hard on.

That's allI have for now except for what @Someday states. I'm assuming you have stumbled onto this niche market while creating your business plan and pro forma. Keep in mind, I can spend 100's of hours developing a brownie business. When I open the doors and all the customers are asking for lemon squares, I'm now in the Lemon Square business. Take those 100 hours and do your due diligence. I sat in my car in front of my current location before pulling the trigger and just observed the trafic both on the street and the sidewalk. Type of cars, style of clothes, etc.

Best of luck to you, trust me, I not trying to be a downer. I'm pro small business, especially this week.

Have your funds in place. Food service is a banking joke. They went from calculating equipment at .10 cents on the dollar to zero.

If you want to ask for 250,000. you will need to collateralize it with funds that you already have and that has to be liquid. Think twice before getting funds from friends, or family members. Always strangers. The first two can keep you up at night if things aren't going right.

Make sure you have a minimum of 8 months to a year worth of funds available before opening. A large percentage of failures in this industry come from a lack of basic business knowledge and numbers followed by trying to live out of the register when opening.

just my 2 cents


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## jimyra (Jun 23, 2015)

"Make sure you have a minimum of 8 months to a year worth of funds available before opening"  Panini has many good points but I would advise 2 to 3 years before breaking even in many cases.


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## jake t buds (May 27, 2013)

Not all building codes are the same for most businesses.

There are designations for building type, use, location, etc. Then there is ADA. Building code will also vary from state to state. As will zoning restrictions. 

In NYC, and expediter is practically a necessity in dealing with the Dept. Building and Construction as well as going through the permitting process.

But agree wholeheartedly that contractors aren't your best source of information.

I suggest you visit a local architect that has some experience in the F&B industry. They will be able to tell you what you will need to comply with specifically for the location you are looking to convert. Venting, drainage, fire protection, ADA, signage, etc.


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## chefwriter (Oct 31, 2012)

The others have already given you all the excellent advice you need. So I'll address the lease issue. 

"I don't want to lose the space..".

 If you are forced to sign the lease before getting the basic information that the others here have outlined, then you should not sign the lease. Any time you are told to make a decision in a hurry, it will inevitably be a bad decision. Even with all the permits, authorizations and what not in hand, signing the lease is something to be done thoughtfully. So if you can't be allowed time to figure these things out before signing the lease, it is already a bad deal. It may be a great location but not the only one. And the success of your business will depend on many other factors after the ink has dried no matter where you locate.


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## jcakes (Feb 18, 2007)

Take what you can from my experience.  I've been a primarily wholesale specialty baking business for a while; last year I looked at spaces that would enable retail as well as my existing wholesale accounts.  I found a great location (on a main roadway, lots of parking) and then hired an architect to draw up plans while I was working with a lawyer to negotiate a lease.  Once I had something to work with, I started negotiating with the landlord for certain things - 3 months rent free to do the construction, the landlord agreed to put in a tile floor (I only had $ to sand the existing concrete and paint it) and split the cost of replacing the existing water heater.  My lawyer put in clauses pertaining to general maintenance (I do routine maintenance to keep up the a/c and heating systems, but if something breaks, the LL is responsible for the cost of repairs), taxes, water, etc; and also how the lease ends or can be extended.  While we were negotiating the lease, and once the plans were worth showing to someone (and I'd already gotten bids from contractors at this point), I took the plans to the BOH and asked them what input they had.  That's when I learned that, in that town, there's a public toilet requirement for all food service establishments.  You have to allow the public to use your restrooms - even if you are not a restaurant.  I would need a variance in order to not have people use the bathroom and the variances were only granted at BOH meetings held  only once a month and you had to get on the meeting agenda 30 days in advance in order to petition for a variance.  The BOH also said it had to be an ADA handicapped accessible bathroom (which the existing bathroom wasn't). The architect on the other hand, said this was not correct, and instead of architect calling the BOH, which I directed him to do; he called the Building Inspector who agreed that this requirement didn't apply to me.  I actually argued with the architect saying that if the BOH is issuing permits and this was their requirement we had to have it.  The architect told me I was wrong, that the BOH couldn't supersede the state building code and he told the contractor to apply for the permits. The landlord and I had signed the lease based on this advice.  The BOH stopped the building permit.  The architect was wrong.  It caused a 3 month delay and the landlord was unwilling to pay for the bathroom (based on what we had negotiated previously) so it fell to me to pay for it. The bathroom added $6k to the cost of the project.  The lease clock started the day we executed the lease, and the delay in getting on the BOH meeting agenda to get the bathroom variance cost me another month.  In the end, I paid rent for three places (the new space, my old space and temporary rental space) for a month, and that, plus the cost for the water heater and bathroom took up all of the additional cash I had in reserve.  It took me a year to open for retail (I had already established two very good wholesale accounts so not being open for retail wasn't a problem) because I was paying off the construction loan, I had to replace the walkin cooler that didn't survive the move as well as I'd hoped, and buy 6 work tables.  I ended up getting a lower grade display case than I wanted, but it will do (I bought that from The Restaurant Depot online equipment site because there's a Restaurant Depot a mile from us so it was really buying it from them.  And that was a huge mistake because they were the absolute worst vendor experience I had - and considering the amount of plumbing problems I had, that's saying something.

Do some due diligence - look at the city or town's website and see if there's any useful information (by-laws, regulations, etc) that you can see in advance of meeting with them. I did this, and learned that I had to have a 100# grease trap (the minimum size required by the town) so it was easy to put that in the plans.  I knew that the town would require a 3 bay sink with two drainboards so I could plan for that as well. Do your homework, I can't stress this enough.

Good luck.  Keep us posted!


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## panini (Jul 28, 2001)

The most important to remember about the BOH. Each jurisdiction compiles and creates their codes on how they interpret the FDA guidelines. That's why there is nothing in stone or blanket code.

In one location they said I was required to have a table top convection oven hooded with ansel. I had two other locations in the same city where they were not required.

It basically comes down to CYA. You can sign a lease without all info but you need a lawyer to put in the contingencies.

@JCakes, the lease you had negotiated with your landlord regarding the maintenance plan was an anomaly. I currently consult for three organizations that provides help needed for people wanting to get into small business, from concepts to seasoned businessperson.We provide a free service. I've helped people all over the US and with leases I've never witnessed anything but a clause that what ever the landlord provides to tenant it must be in working condition when the lease starts. It usually ends there. I've seen some equipment leases that require the lessor to hire a maintenance company for them to cover your equipment. In the past 9 years I haven't really seen a lease that wasn't triple net.

I always suggest to people using our service to get some education on business and numbers. It's very risky to count on bookkeepers and accountants. I does not have to be a food related program. Just a couple of Quickbooks (example) classes at your community college will reduce your risk of failure greatly.

Last year was my 20th year in one location. I went to the bank to borrow 135,000. to build out a space in an indoor farmers market. I thought I could knock it out in a couple of hours.They told me I would have to put up a few liquid CD or such in the same amount. The banks are just not lending.I explained I wanted to borrow to allow some perks for myself and that my annual was 10X's + the amount. I mean you can get funds but it's usually close to usery with the interest rates. I explained to the bank that I qualified for 1.2 from my credit card provider. I just didn't want to go that way. BTW I moved banks. I am now at a smaller more personable bank. The loan officer of my last bank was younger then my daughter and had no knowledge of business. Just read of the computer screen at me.


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## jcakes (Feb 18, 2007)

@panini - you're right.  The building I'm in is about 20 years old; there were no original site plans on file with the town, (hence the need for the architect) and the space had been vacant for 2 years prior to me showing interest.  I wasn't willing to take on the expense of the buildout and then find out that the a/c failed or the furnace needed to be replaced or need major work. As it was, when the contractor came out to look at it to bid on the job, he found things that needed to be brought up to code than the LL ultimately paid for.   I think working with an individual landlord (rather than a corporate real estate entity) might have made that easier; I don't know.  Maybe the corporate entity would just take care of all that regularly and it doesn't become an issue for the tenant.  I just know that I never want to move again for a very long time, if ever. Now it's just getting that refrigerated van!


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## panini (Jul 28, 2001)

@JCakes, I've sworn off all types of moving. Business, home, sometimes even down the sidewalk to retrieve the mail.

I've been running 20012's and 2013's Ford Transits refrigerated vans. Hardly no issues. I buy them from Sanderson Ford out of Arizona and have

them shipped. I buy them when ever there is a body change. The have to redesign the slide in cooler. I hold them until the new ones arrive and usually get

at least a 20% less quote because they have to move them to bring in the new ones.

I use Sanderson because they are accustomed to installing coolers on anything and usually have stock. I bought one locally a few years back and the local dealer botched the install.

The vans are running the V-200's and the 300's Thermokings. They installed a split screen viewer with a back up camera and a lighted inside camera so that

my drivers can watch the cakes as they travel. Oh! on the Kings, make sure you get the remote plug-in. You can even use them for storage at busy times.

.I went to the Transits because the regular commercial vans cost me more than the cooler

to change out the suspension to accommodate a smooth ride for wedding cakes.

If you decide to do something like that, insist on not using Ford Motor Credit. I've always got better rates from other banks. Mine are at current low rates with

Suntrust bank. Make sure* you* do your shopping around for rates. Each time the dealership gets a quote, it puts a hickey on your credit as an inquiry. Don't listen to people

that say" oh, it only counts as one inquiry as long as it's done in thirty days". NOT! Equifax reports every bathroom visit.

Have a good one.


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## Hank (Sep 8, 2015)

Great advice above.  My first thought was that signing a lease before you were ready was a huge mistake.  Get your other ducks in a row first.  If you don't get the current space would be disappointing but if you get it and then are delayed several months you are putting your new business under financial stress early.  You will be in a much stronger position if you have everything lined up and then have to wait to find a space.  I'm sure you want to get up an running asap but I would advise patience.  You are far better off in the long run if you have your plan in place and then have to wait to find an appropriate space.

Every jurisdiction in very different.  Go into the building department and BOH and try to develop a relationship with someone.  Make clear you are in the planning stage and NOT looking for specific commitments, but rather their counsel and advice on the best way to navigate the process.  Try to get a feel for the timeline required to get to opening.  Expect it to take at least that long, probably longer.  You must work within their system, not try to change it, regardless of what you feel is "right".  It's their ballgame.  Develop a corporative relationship, not an adversarial one.  It will serve you well.


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## chefbillyb (Feb 8, 2009)

90% of all this s/b done before you even look for a building. The laws/rules/codes will fit almost all locations within the city/county your looking at. I would take this post and all the great advice these owners went through as a good learning experience. You never want to say " If I only knew this in the beginning It would have saved me a lot of heartache". Learn from what these members said get all the info you need to be in the know. These's to much bullshit in city codes and health dept codes to just go in blindsided.


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## backtobasics2 (May 2, 2016)

Thanks to all. ALL experience and advise is most welcomed!!! Always good to avoid pit holes where you can!    I' spoke to the local BOH inspector first to get requirements. He also directed me to local & state electric & plumbing inspectors.  Contacting them next so they can review my floor plan, electric plan, plumbing plan etc.  Getting build out costs now from some contractors to add some firmer numbers to my business plan. In the meantime I'm in negotiations with the land lord while I'm working the permitting angle.   It's a small tourist town, so there aren't many/any spaces that become available in key locations.  Location is very important in this specific town, so I was anxious about securing the space.  Panini, you wouldn't want to be in my shoes... I'm moving houses, business, states... pretty much everything.  Because of my moving timeline, I physically won't be able to open for six months, I estimate the built out to take 3 months, but I felt I needed to secure the space.  I'm moving to this town to specifically open this business, so I was afraid if I lost the space, i'd be sunk.  I've heard rule of thumb for reserve capitol is build out & start up plus 8 months operating expenses.  Anyone want to chime in on that one?  I don't anticipate needing financing, as I'm selling my house and downsizing, so it's my house profit I'm putting up to start this up.    Also any advise on buying used equipment.  I need to save where ever I can in the start up phase, because I don't want to get pinched later down the timeline.  I'm feeling like I can always upgrade down the road....


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## jcakes (Feb 18, 2007)

backtobasics2 said:


> I don't anticipate needing financing, as I'm selling my house and downsizing, so it's my house profit I'm putting up to start this up. Also any advise on buying used equipment. I need to save where ever I can in the start up phase, because I don't want to get pinched later down the timeline. I'm feeling like I can always upgrade down the road....


This scares me more than you know. Can you afford to lose this money? Can you get a secured loan, maybe?

I myself would not be comfortable taking this kind of risk, so perhaps I'm just projecting my fears. I worked like a fiend for two years to save up what I needed, and I bought things as I needed them (ovens, mixers, etc) so I didn't need to buy equipment when I moved into this space. Over the years, I accumulated what I needed: a 30 and 20 qt Hobart, 100+ sheet pans, speed racks, double stack Blodgett, so I didn't need to buy any equipment when I moved. I had a walkin cooler (a major cost if you buy new, but buy new refrigeration.  Trust me on this. I got panels from a cafeteria that was shutting down, and then bought the mechanics. I moved the cooler from one site to this one, and the panels just didn't fit together well and ultimate I ended up replacing the box last summer.) My construction costs were close to $70k (that includes $10k for the ventilation/ansul system). As it was, I needed to borrow $22k, and I paid that off in a year. Being in debt scares me so that's why I went the route I did. My expenses are high enough (labor is killing me!) without worrying about a loan payment in there. The minimum wage in my state is $10/hr and some of the staff just shuffle through their hours, while others are kick-ass.

Something else I've learned in this past year. There's never enough $ to upgrade something. Buy the best you can afford, take care of your equipment.


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## panini (Jul 28, 2001)

Hank said:


> Every jurisdiction in very different. Go into the building department and BOH and try to develop a relationship with someone. Make clear you are in the planning stage and NOT looking for specific commitments, but rather their counsel and advice on the best way to navigate the process. Try to get a feel for the timeline required to get to opening. Expect it to take at least that long, probably longer. You must work within their system, not try to change it, regardless of what you feel is "right". It's their ballgame. Develop a corporative relationship, not an adversarial one. It will serve you well.


@Hank, I'm not disagreeing with you at all.

I tried this this approach one time in the past. In my area the people working in positions of authority in these two departments are not used to communicating with lay people. They are used to speaking with contractors, inspectors, etc. Basically their own lingo. They were not receptive at all to a relationship. I got the feeling they were always conscious of not drawing attention to a possible kick back situation.

My time was better spent evaluating local kitchen contractors. Speaking with everyone they had done work for.

I pursued a better relationship with inspectors. I disciplined myself never to ask why? I always ask them to teach me why. There were numerous times when meeting code was very costly both financially and time wise. My teacher-student-friend relationship usually resulted in a lesson on how to go in another direction, or go around to accomplish the same code approval.

Um, I shouldn't say this but it was years ago. I would ask the contractors to evaluate inspectors. They would give me names of good ones and bad ones. If I got a call that one of the bad inspectors was coming that day, I made sure the property was vacant and a sign saying someone would return tomorrow.


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## backtobasics2 (May 2, 2016)

update & used equipment question...

Just checking in.  Had construction plans drawn up, been getting several quotes & checked in with health inspector, fire marshal etc.  Good thing I did, and thanks for the advise. Needed a town re-zoning permit and a sewer re-allotment  permit.  Fortunately both of those things were able to buy me some time in stalling with signing a lease, and I've now gotten approval on both those items. Meeting with the fire marshal again to review fine tuned layout plans, before I start construction & starting to source vendors & equipment now. I negotiated a fourth month build out before I have to start paying rent. It's going to be a pretty small kitchen (but room for later expansion). Menu is limited morning pastries, lunch time panini, afternoon cupcakes, cakes by the slice (or whole), mini tarts etc. I'm mostly looking to invest in used equipment at this point (except refrigeration, I've read that really needs to be new). I'm not doing any bread, but was planning on getting a deck, for versatility and I thought that would be safer to buy used as well (less moving parts).   Question, as I mentioned before, I'm relocating.  So right now I'm in NYC and have access to dozens of equipment shops. But I've read that it might be better to buy used equipment from local sources, for warranty and serving reasons.  I'm moving to a somewhat rural setting, with one regional supplier with limited selection.  Any words of wisdom?


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## chefwriter (Oct 31, 2012)

Which rural area are you moving to? Further up in the Hudson Valley or somewhere else?


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## backtobasics (Apr 25, 2016)

Maine!


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## foodpump (Oct 10, 2005)

1) Any refrigeration, buy brand new.  If you don't do this, you'll be sorry. Remote compressors may cost more in the beginning, but boy, your kitchen will be a lot quieter and cooler 

2) Other equipment, (mixers, sheeters, ovens, etc) buy used, but from local bakery equipment suppliers--stay away from the restaurant guys, they don't know jack sh*t about bakery eqpt

.

3) |Buy any small wares used--auctions, garage sales, craigslist, rest. suppliers, whatever.  This incudes bowls, sheet pans, bun racks, cake forms, but also shelving, prep tables, sinks (but must be NSF approved) cleaning eqpt, l;ighting fixtures, plumbing fixtures,  

4) Chum  up your local bakery ingredient supplier rep.  Odds are he/she'll know who has  what piece of equipment for sale.

5)Make sure your grease trap is up to code

6) Install  l.e.d lighting where ever possible, overall lighting and display cases.  Not only does this operate with far less electricity, but it doesn't put out any--I mean "0" heat.  When I converted my lighting in my display cases from florescent to led,, did I ever cut back on power consumption.  Even in my dry case, the florescent lighting would melt chocolate. led won't. 

7)  Wholesale, wholesale, wholesale.  This is where you will actually make money, this is your bread and butter, your rent money, and your future.


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## panini (Jul 28, 2001)

@foodpump ,

I can't agree more with his posts!

Wholesale is critical with this type of business. You're wholesale income has to be great enough to fully carry your projected costs for the entire operation. Your retail income will cover

your collateral/un-projected costs and hopefully cover a salary for yourself.

MY FIRST BIG LESSON !!! Pay yourself !!!!!! If you don't forecast your salary into your costs you will never enjoy

ownership. When you first start, you'll find every excuse to not cut yourself a check. I need a menu board, I need a floor mats for the kitchen, etc.

I understand there will be times when you won't

be able to cash your checks, trust me, I looked at piles of my uncashed checks. It's better to look at that pile than no pile at all.

It also critical to cut those checks and at least pay into your Social Security. Please don't listen to all the BS about, it doesn't matter, SS won't be around when I'm eligible. It's never going away.

It took me a long time to catch up. It could be a game changer when you stop working. It's ok to know you'll be able to pay the bills when retired, but it's nice to have a kicker to do things outside the box.

Refers, remote is the only way to go. I combined one of my wholesale kitchens and retail in 2008 for financial reasons. We went through one year of hell with most all compressors inside. I pulled the trigger and everything was replaced with remote. I swear we all lost some hearing that first year. Along with everyone screaming at one another because of the ambient noise. There is white noise and I learned there is black noise.

Decorators complaining that the kitchen is not cold enough to decorate. 20 tons of AC ran 24-7, never shut off.

When going remote, I suggest rooftop if possible. I had someone come and build a custom rack out back for all compressors. Pulled in one morning to find someone drove by late at night and snatched all for the copper.

I don't recommend the prefab type compressors that come ready to go. You need a qualified person to install the compressors. You need to ask them if they know how to size the lines for your specific brand. The lines are sized to the length of pipe the freon has to travel.

In Maine, I'm pretty sure you'll need a dog house for weather. Probabilly will also need a crank case heater. Make sure your fans have controlled speeds. You might need to adjust seasonal pressure.

Sorry, I could go on for days,

Keep in mind, opening a bakery is very similar to having a bipolar disorder. The lows are low, and the highs are high. If you hang in there, it'll pay off.

Best of wishes for you, I'll put you on my owner prayer list. I think I put Foodpump on about 10 yrs. ago./img/vbsmilies/smilies/wink.gif


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