If you want a business that allows you to spend your day solving delicious problems, then a bakery might be the perfect business for you. There is an intense demand for the indulgence of eating delicious things, and a bakery can fulfill that need. However, there are some things you should think about before starting a bakery business in the Philippines. Therefore, this article will be your ultimate guide on how to start a bakery or baking business in the Philippines.
How is the bakery market in the Philippines?
The bakery market in the Philippines is in great need of competent bakers. With more and more people eating out, the demand for bread and other baked goods rises. The people of the Philippines love to indulge in bread, cakes, pastries, and other baked goods.
Because of this, the bakery market will continuously grow over the next several years. Thus, it is a great time to start a bakery business now before it becomes too late.
What are the pros and cons of starting a bakery in the Philippines?
The bakery market in the Philippines has several advantages compared to other businesses. However, it also comes with a few disadvantages.
Here are some of the pros and cons of starting a bakery business in the Philippines:
- Filipinos love bread, pastries, and other baked goods. As such, the demand for these baked goods will continue to grow.
- People prefer buying convenience foods. And Filipinos highly value convenience, and this is why many people are willing to pay more for convenience baked goods. The working and middle class still value time, and they are willing to pay more for their convenience foods.
- The primary demand for bread is never-ending. Bread is one of the essential foods that Filipinos enjoy eating. As a result, the market for bread in the Philippines will never be stagnant.
- Businesses are uncertain, and it is hard to know the real future of bakery industry in the Philippines. For sure, the bakery business will continue to thrive and at the same it can be very competitive. Therefore, you will always have to try your best to outdo your competitors.
- You will spend a lot of time perfecting your baking skills. Since the bakery industry is thriving in the Philippines, you will have to work hard to keep up with your competitors. As a result, you will have to spend a lot of time in your kitchen perfecting your baked goodies.
- It would be best to plan out your bakery business before starting it. Planning will also help streamline your business and prevent you from wasting money on things that won’t benefit your bakery. Read on to know more about starting a bakery business in the Philippines.
How to Start a Bakery Business in the Philippines
We have compiled a list of steps that you need to do to ensure your bakery succeeds in the Philippines. Here you go:
Step 1: Identify the reason why you want to open a bakery business.
There is an incredible amount of competition in the foodservice industry. You must know precisely why you want to open a bakery business in the Philippines. It would be best if you had a clear understanding of why you want to open a bakery business in the Philippines.
Step 2: Take a baking course.
It would help if you took the time to learn how to bake correctly before starting a bakery business in the Philippines. Additionally, it will help you take control of your business and ensure that the competition does not catch you off guard.
It would help if you considered enrolling in a baking course to learn more about running a baking business. With a variety of baking courses available in the Philippines, you will be able to learn the art of baking.
Step 3: Conduct market research and create a comprehensive business plan.
You should spend a great deal of time identifying your target market. As such, it will ensure your bakery business is the perfect fit for them. It would help if you talked to people who have experience starting a bakery in the Philippines.
In addition to talking to other bakers, you should also speak with foodservice professionals about how best to create a bakery business in the Philippines. For your bakery business to thrive, you must understand and meet your clients’ needs.
Step 4: Choose the location for your bakery business.
When you are starting a bakery business in the Philippines, you must decide on the location for your bakery business. Selecting the area is one of the essential decisions you will make. It would help if you chose a neighborhood where your target clients are.
You can determine this by doing thorough market research and by asking around to find out where your target customers usually shop.
Step 5: Do you want to franchise or open a stand-alone bakery?
You must clearly understand whether you want to franchise or open a stand-alone bakery business. Franchising can be very rewarding because you will be working with an expert franchise consultant who will help you set up all the necessary systems, policies, procedures, and protocols.
On the other hand, opening a stand-alone bakery business is more challenging but rewarding. You will get to maintain control of your business, but you will also have to work hard. You have to make an informed decision on whether to franchise or open a stand-alone shop.
Step 6: Get the permits and certifications.
When you start a bakery business in the Philippines, you will need various permits and certifications. Here are the things you will need to acquire before starting a bakery business in the Philippines.
- Registering the business in the Department of Trade and Industry (DTI) is a formality. Still, you will need to register your business name before officially opening and operating.
- Mayor’s Permit or Residence Certificate & Sanitary Permit – The Mayor’s Permit is a permit you need to obtain before selling your baked goods. The Sanitary permit is also required if your bakery intends on cooking or bake.
- License to Operate (LTO) or BFAD Certificate – The LTO must operate your bakery if you run a food service business. You will need this to have your products labeled, packaged, and transported safely.
- Tax Identification Number (TIN) – The TIN is likewise a requirement for you to operate your bakery business. It will enable the government to locate and tax your business quickly.
Step 7: Start with a small setup.
It would help if you started a bakery business in the Philippines with a small setup. This way, you will have the opportunity to learn from your mistakes. By creating a small structure with a very good interior design, you will be able to understand your target market better, and you will also be able to mold your bakery business to suit the needs of your target market. Therefore, you can start with a small setup and expand later.
Step 8: Buy the necessary equipment and supplies.
When starting a bakery business in the Philippines, you must have all the right equipment and supplies. Everything must be in good working order, and this will ensure that your taste, product quality, and level of service are consistently high.
You should make sure that you purchase knives, weighing scales, fans, and ovens well before starting a bakery business in the Philippines. The right tools will help you to become a leader in your market and give you a competitive edge over your competitors.
Step 9: Know the ingredients.
Ingredients play an essential role in crafting a good quality product. The right food ingredients will enable you to make a delicious product that will suit the tastes of your target market. Search and buy the essential food ingredients like flour, sugar, eggs, milk, and butter.
It would help if you explored and sourced low-cost, good-quality ingredients to maintain your profit margins. Therefore, a combination of good quality ingredients at low prices will enable you to keep your margins high.
Step 10: Set the price of your products.
It is essential to understand the price points of your market so that you can know the appropriate pricing model for your products. It would be best always to charge your target customers a fair price for their products. Make sure you do not exceed their expectations by upselling them and overcharging them.
With the proper formulation of your pricing model, you can always ensure that your target customers are satisfied with their products. Thus, you’ll have the best results in your business.
Step 11: Hire employees.
A good bakery business will always have a dedicated, hardworking, and skilled team of employees. You must hire the best employees for your bakery. Ensure all your employees are well trained and motivated towards a common goal.
Your employees will be your greatest assets in your bakery business, so you should focus on hiring and retaining the best people. Employees will determine the fate of your bakery business, so you will have to make sure that you hire the best people for your business.
Step 12: Innovation and marketing.
To be successful in your bakery business, you will have to consistently come up with innovative products, and you will also have to be very active with your marketing campaign. Marketing strategies will enable you to raise your brand awareness.
However, when you are marketing a bakery business in the Philippines, you must do your market research. It would be best if you also consider using social media and e-marketing to promote your products. Social media will enable you to communicate with your target market easily.
At the same time, constant innovation and marketing in your bakery business will let you reach out to a broader, more diverse, and more informed target market.
Time To Start
Therefore, these are the steps for starting a bakery business in the Philippines. You will likely have to modify or adapt these steps depending on your region and business goals. Remember that the road to success is not easy, and it will take you a lot of hard work and perseverance. However, starting a bakery business in the Philippines has great potential for success due to the large market, diverse target audience, and high demand for baked products.
What Can I Do To Promote My Bakery Business?
You can promote your bakery business through your website and social media. Your customers will usually use the internet to research and evaluate goods. By setting up a website and maintaining a social media presence, you will be able to reach out to more people and market yourself easily.
In addition, you can promote your bakery business through sampling and advertising, among other methods. You must be very active with your marketing campaign to deliver significant value to your customers and potential clients.
FAQs About Starting a Bakery Business
The profit margins for a bakery business are typically moderate, around 25% to 50% gross margin. However, if you can manage your costs effectively and if you can manage to find suitable suppliers, then there are undoubtedly high-profit margins in this industry.
The bakery business in the Philippines is no easy venture. It takes a lot of effort, time, and hard work. You will have to invest a lot of time and effort to set up your bakery correctly, and you will have to put forth extra effort in marketing your products. It is essential to set aside sufficient time for your bakery business to deliver excellent service consistently.
You will need substantial money to start a bakery business in the Philippines. Aside from purchasing the right products and equipment, you will also have to set aside a decent amount of money to hire qualified employees. Overall, you will need a sizable capital, around PhP 50K to 500K to start a bakery business in the Philippines.
TIP: You can get a loan for small business from the government.
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To Sum Up
There are a lot of possible scenarios for your bakery business in the Philippines, and you must always plan things out before you start. However, you can still have a great time running and operating your bakery business with the right strategies, resources, and people.
The bakery business in the Philippines is highly lucrative, and it provides numerous benefits to the owner. However, if you do not anticipate the challenges, you may lose these potential benefits.
Therefore, make sure that you do everything you need to do so that your business can be profitable and successful. And as you grow your business, you may also need a company lawyer, who knows?
We at HICAPS are constantly on the lookout for new ways to help bakers and businesses make delicious baked products. In addition, we offer bakery ingredients like ChiffonAide Cake Oil, Magic Whizk Whipping Cream, Red Velvet Flavor Emulco, and Instabake Brownie Mix.
Moreover, we offer extensive toolkit which includes free “How To Increase Your Sales Amidst The Pandemic” e-book as well as free dealer locator so you can find where your favorite baking ingredients are available.
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- About the Author
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Mervin Manalo is a Chemical Engineer who graduated from De La Salle University in Manila, Philippines. He has over 20 years of experience in the food industry and currently serves as President and CEO of HICAPS Mktg. Corp., a provider of prime baking ingredients.
He also attended a mini MBA program at Guthrie-Jensen, which helped him broaden his business knowledge and skills. Under his helm, HICAPS expanded its business and helped more clients grow thru the years. He loves technology and new trends and is always looking for ways to improve his products and services.