home bakery to storefront, part 1 – Batch 22 Bakery

home bakery to storefront, part 1

We like to use the friendly term, “chunking” to break massive projects into small chunks. It makes everything more approachable. At many, many steps in our growth, we felt like we were taking on something huge. We decided to seriously consider pursuing a storefront in December 2020. For a few weeks, this undertaking felt like a fog of war. But as we learned more, we were able to map out all the little chunks - there are so many, but at least we knew what they are.

This is our path from home bakery to storefront, part 1. (Note: shouldn't be taken as a guide.) It's direct and 1000x condensed, but we hope you enjoy following our journey as it's still unfolding. 

1. Cost/benefit analysis of commercial kitchen vs. storefront 

I won’t speak to the numbers, but some of the major elements of our decision here were: 

  • Capital/rent investment
  • Growth potential, in terms of sales, profit, personal growth, and # of sales channels we can pursue 
  • Risk

Some of the main downsides to commercial kitchen rentals is paying per shelf of space, paying per hour, potentially bad landlord, and possibly unreliable equipment. With a decent amount of commercial equipment already, factoring in our sales and preferred growth rate, we chose to go for a storefront.

2. Gathering info

We spent a few days in limbo-land setting up calls with store owners in our network. We’re very thankful for the council of Antoine (Antoine’s Cookies), Amanda (Discover Pastel), and other friends in our network who gave us insights on: raising funds, sourcing a location, costs & margins, hiring, managing payroll & benefits, and other things that would be roadblocks on this path. 

During our 2-week January shutdown, we spent most waking hours fleshing out the path to storefront, and started on our business plan.

3. Sourcing start-up costs: how, and how much? 

You can fund in a few ways and use a combination of tactics (this list is not exhaustive): 

  • Kickstarter & similar services: while very popular and sometimes ultra successful, it can be tough to raise sufficient funding since you’ll typically be dealing with smaller dollar amounts. If not fully funded, you don’t see any of the money. Additionally, Kickstarter accounts for a chunk of investment that doesn’t go towards your business. 
  • Friends & family
  • Private investments 
  • Bank loan: high interest rates & very low investment rates (<20% applicants)

We called our bank to check requirements for a bank loan, in case we pursue that as a funding option in the future. They require 2 years of tax returns and a business plan. That’s where we started.

4. Business Plan & financials 

If you ever need to make one, google for examples. This covers business & product overview, founding team, growth highlights, the business opportunity, competitive strategy, and financials. The depth and breadth of info took us nearly 2 months to compile, check, and make airtight. Let’s just say the financials were painful and tedious — but we’re glad to have everything down on paper.

5. Raising Start-up costs

This brings us to Today. We decided to pursue private investments. It’s our first time doing all of this but we’re preparing a pitch deck and all the legal contracts. We can’t wait to see you on April 3rd at Investor Day.

Within the link to Investor Day is where you'll find our business plan & financials for review.

6. Sourcing a location: buying assets or build from scratch

A custom build costs upwards of ~$300k, according to our network. We’re opting to make something work by buying assets from a business that’s gone under, and then moving our equipment into the space and supplementing with more ovens, mixers, and racks. It won’t be perfect, but it’s a very reasonable, cost-effective solution. 

7. Procure equipment

Over the last couple years, we’ve bought a commercial oven and a couple 20 qt mixers. We once waited 7 months for a mixer… When we reached our breaking point, I called every equipment store in the area and picked up one within a day. Needless to say, I think we’ll know how to handle equipment purchases this time around. 

8. Passing inspections

This is probably still one of the most unknown parts for us. Buying assets from a space that was previously approved for food service increases the likelihood that it we will be up to code, but we'll probably work with an architect before and after signing a lease to get a ballpark of how much work & capital needs to go towards building modifications. 

We will also need to pass a Food Safety inspection. 

9. Hire and train staff

Eventually we’ll start hiring. We’ll look for people who are aligned with our values. We have a fair number of standardized processes already, but we will set up various ways to quality-control with more cooks in the kitchen.

10. Soft & grand opening

Our soft opening strategy is ready and we’re stoked to get to this point. 

How do we feel?

We feel a lot more prepared after getting the business plan and financial projections behind us. There is always going to be risk in opening any store, let alone for food, but we’re ready to work and do everything we can to mitigate those risks. We're incredibly happy to have our customers' support in this :)