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Is it possible to start a bakery with Rs.20-25 lakh and scale it up to a Rs.75 crore business in barely five years? It might seem incredible, but this is exactly what Bakingo managed to do. Started in 2016 with four employees and a surplus of initiative, the online bakery today services 37 cities with 103 cloud kitchens. So what does it take to make a success of an online bakery?
If you were to go by Shrey Sehgal, Cofounder of Bakingo, the secret recipe lists multiple ingredients: identifying a niche, product development, consistency of flavour, packaging and delivery, the right staff, and marketing savvy.
The journey began with Sehgal realising that, despite the growing food market in India, there was no brand exclusively dedicated to cakes. “There were brands for all fast-food options like burgers and pizzas, but no go-to place for bakeries,” says Sehgal.
Back then, bakeries only had cakes with traditional designs and limited variety. Sehgal, along with friends Himanshu Chawla and Suman Kumar Patra, saw the gap and focused on quality and unique designs to carve out a niche for Bakingo. “I got the initial capital from my first business, Flower Aura, launched in 2010-11, which was a success. Most of the profits from Flower Aura were used for expenses like renting, hiring and equipment deliveries,” says Sehgal. Today, the combined turnover of Flower Aura and Bakingo is Rs.200 crore.Getty Images
Baking up a storm: (From right) Founders Shrey Sehgal, Himanshu Chawla and Suman Kumar Patra
Sehgal was still studying for his Master’s at MDI Gurugram at the time. So he set up Bakingo’s initial office in a basement near the MDI campus for convenience. Operations and product development took place here before scaling to other locations. The focus was on perfecting recipes over two to three months through rigorous daily tastings to set benchmarks for quality and flavour. “Once you create a standout product, consistency is the key,” says Sehgal. “When customers come back, they want the same taste that they loved last time,” he adds.
How to start an online bakery
STEP 1
Identify market trends
Find the right gap in the baking market and identify a niche that sets you apart. Bakingo, for instance, capitalised on the lack of branded, quality cakes. This will help you build a loyal customer base.
STEP 2
Get the licences
For an online bakery, you only need GST and FSSAI certificates. If you have more than 10 employees, you will also need PF registration and ESI certificate. If you’re hiring a professional, these should cost you Rs.16,000-17,000.
STEP 3
Set a budget
Sehgal recommends starting with a budget of Rs.5-10 lakh, which provides a cushion for a professional set-up. If you’re planning to begin locally, even Rs.3 lakh can work as a starting point. Keep your finances tight and scale gradually.
STEP 4
Hire the right team
If you are not developing recipes yourself, start with a chef, 2-3 delivery partners, and someone to manage the technical side, such as the website and orders.
STEP 5
Perfect your recipes
Food quality and flavour consistency are non-negotiable. Collaborate with your chef to create unique, highquality recipes. Differentiation is key; customers should choose you for something they can’t get elsewhere.
STEP 6
Plan delivery operations
Cakes are delicate and delivery can make or break your brand. Initially, consider handling in-house deliveries to ensure quality. Partnering with aggregators like Zomato or Swiggy can wait until your operations and volumes are stable.
STEP 7
Use social media for marketing
Social media platforms like Instagram and Facebook are your best friends when starting out. Showcase your products, engage with your audience, and create buzz. Start small with a daily ad budget of Rs.500 to target local customers effectively.
Delivery, however, was more challenging than baking because cakes are difficult to transport. At first, they only took orders from their website, Bakingo. com. They had an in-house team to manage deliveries and staffers were trained to handle cakes with care.
When they started teaming up with food delivery aggregators, they were sceptical if they would be able to handle the transportation. “We were afraid they would sully our brand name if they delivered damaged cakes,” says Sehgal. “That’s why we started focusing a lot on packaging. We used cake savers (plastic support in cakes) so that the boxes could survive even a 45 degree tilt. We worked with a chef to make sure we had an edible adhesive to stick it to the base. Triangle cake savers at the bottom prevent damage during packaging,” he adds.
Getting customers was another challenge. Social media, particularly Instagram, was their primary channel for showcasing modern designs that stood out among old-school cakes and invited significant attention. “In our first year, we didn’t have a budget for paid ads,” Sehgal admits. So they relied on organic reach and even pamphlets in newspapers, which later gave way to Google Ads as they scaled. As they expanded, Bakingo allocated 5-10% of its revenue to marketing. Their first big break came just before the pandemic, when they partnered with food delivery giants like Zomato and Swiggy, that charge 20-30% of gross sales as commission.
For Sehgal, timing is the key while running and managing such platforms. “You have to figure out your fixed cost. The math is simple: calculate the contribution margin from each order and multiply it with the number of orders required to take out fixed costs. This is the number of orders you should have before starting out,” he says.
Bakingo’s journey
- Rs.20-25 lakh was the initial investment sourced from the profits of an earlier business.
- Rs.30 lakh was the sales revenue in the first year (2016-17).
- 5-10% of the annual revenue is the company’s marketing budget.
- 4 members were in the launch team.
- 37 cities are now being serviced by 103 cloud kitchens.
With a bigger budget, Bakingo is experimenting with out-of-home (OOH) ads, OTT platforms, and influencer marketing to widen its reach. The company aims to go to tier 2/3 cities, open more retail stores and invest in R&D and product innovation.
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