How to Open a Bagel Shop: Starting a Bagel Shop Business Steps

What Do You Need to Start a Bagel Shop? (Checklist)

From window service on a busy street in New York City to a quaint, bakery-style shop with sit-down dining in a suburb, to a fast-casual joint off a busy highway exit or a home-kitchen catering service that supplies local businesses and families with delicious breakfast spreads, deciding on the format of your bagel shop is an important first step. 

Consider the customers you’re hoping to reach, where you want to reach them, and what resources and funding you have available to you. Once you have this step down, it’ll help inform the development of your business plan.

How Much Money Do You Need to Start a Bagel Shop?

In theory, starting a bagel shop sounds like a fun idea, but it’s no small investment and there is no single, easy answer to this question. Instead, the cost of starting a bagel shop ranges depending on the location, size, and design of your business. 

On average, the overall cost to open a restaurant — with all expenses accounted for — is between $100 and $800 per square foot, according to FreshBooks.com, with costs varying based on location, concept, size, materials, new or existing location, and equipment. That's a median cost of $450 per square foot. For a restaurant operating out of hundreds or even thousands of square feet, that number can add up quickly.

1. Choose a Business Format

Start by deciding what your bagel shop will look like. 

From window service on a busy street in New York City to a quaint, bakery-style shop with sit-down dining in a suburb, to a fast-casual joint off a busy highway exit or a home-kitchen catering service that supplies local businesses and families with delicious breakfast spreads, deciding on the format of your bagel shop is an important first step. 

Consider the customers you’re hoping to reach, where you want to reach them, and what resources and funding you have available to you. Once you have this step down, it’ll help inform the development of your business plan.

2. Create Your Business Plan

Think of your business plan as the dough from which you’ll bake your bagel shop into existence – you might get innovative and adjust the recipe, or add in new ingredients as the process develops, but mixing up this initial blueprint is integral to setting your business up to rise to the occasion.  

What you’ll knead: 

• An executive summary and overview of what your business will look like

• The people who make up your team

• An industry analysis, including data on your target market, location, and competition

• An outline of your marketing strategy

• Operations details, including company policies, systems, suppliers, and what jobs to hire for

• Financial analysis, including key costs and first-year projections

3. Pick Your Location

If you want to sell bagels to hungry travelers looking for a quick bite on a long drive, an easy-to-access, fast casual spot off the highway might be perfect for your business.

If you want to reach college students or young professionals craving carbs on a Sunday morning, consider setting up shop in a city with proximity to college campuses, apartment buildings, and office buildings alike.

Maybe you’d rather cater birthdays or office functions, and are ready to turn your home-kitchen into the best bagel supplier in town. Or, you love the flexibility of a food truck, and would rather be on-the-go, cooking up tasty goods and serving spreads all across town. 

Your location will, in large part, determine your customers – and, by extension, your revenue – so make sure you’re considering components like accessibility (do you have parking, bike racks, are you close to public transit?), permits and zoning requirements, rent and utilities, sustainability, style and aesthetic, and anything else that would impact the experience customers have ordering and eating in your space. 

4. Apply for Licenses and Permits

No matter where you open your business, whether it has a foundation or wheels, you will need certain licenses and permits to be able to operate your shop. 

The sooner you figure out which you’ll have to obtain and how much it’ll all cost, the less likely it'll be that you’ll have to account for missing pieces down the road. Leave the holes to the bagels and fill in your plan with enough time to get all of your license and permit requirements in order.  

5. Taxes, DBA, and EIN

Tax requirements are another unavoidable component of opening any kind of business. 

Make sure the only twist in your plan is of the dough variety by figuring out necessary tax information – like your DBA (“doing business as,” or your company’s trade name under which you’ll be conducting business) and your EIN (Employer Identification Number, or the number assigned to your business by the IRS for tax identification purposes) – early on in your planning process. 

Starting a business is hard enough as it is. Getting this step done sooner rather than later will help keep you moving forward on the path of yeast resistance! 

6. Create a Marketing Plan

Every business, restaurant, and bagel shop is one-of-a-kind, with recipes, products, location, design, and customers that are special to that individual store – and it’s important that your marketing plan reflect that same uniqueness to show that you understand and can cater to your specific audience. 

While that means that every marketing plan will be different, here are some components that are always helpful to consider:

• Branding – including name, logo, colors, fonts, and anything else in your brand kit

• Social media presence – including Instagram, Facebook, Twitter, TikTok, LinkedIn, and more

• Production – building visual (photo and video) and written content to engage customers via social media, email lists, or other marketing channels

• Advertising – in addition to social media, advertising includes radio, print advertising, digital advertising, email marketing, and other relevant campaigns

• Search engine optimization – strategic accessibility of your website on relevant search engines

7. Understand Your Finances and Operating Expenses

Like we said, opening up any business is a challenge – and an expensive one at that. Make sure you take the time to consider how you’ll come up with the dough necessary for your new endeavor. 

First, you’ll need to figure out how much it’ll cost you to open your bagel shop. Once you have that number, you can explore financing options, like loans, cash advances, lines of credit, crowdfunding, friends and family fundraising, and more. 

Next, you’ll need to make sure your business will be financially sustainable after it opens. This means understanding key data like your projected costs and revenue, profitability, and business trajectory. Some of the most important performance metrics to help you track these numbers include:

• Break-even point

• Cost of goods sold (COGS)

• Overhead rate

• Prime cost

• Food cost percentage

• Gross profit

• Employee turnover rate. 

8. Design Your Menu

Okay, you’ve made it through the taxes, regulations, and expenses – now, it’s time for the fun part! Your bagel shop menu.

There are (baker’s) dozens of ways you can choose to sell your bagels – the bagel flavor opportunities alone are endless, but what about cream cheese or other spreads? Will you offer any different or unique flavors? If so, will you offer tubs to-go or only serve your spreads on your bagels? Can the bagels be toasted? Will you sell bagel sandwiches? Mini bagels? How many at a time? What combos will you provide? What about coffee or other drinks to go with your baked goods? 

Also, consider which bagels attract the most business – do you have a fan-favorite bagel, best seller sandwich, or signature combo option? What makes your shop stand out? Will you switch up your menu with the seasons or stick to tried-and-true classics? Will you collect customer feedback? If yes, how so? And how will you integrate it into your menu?

Answers to all of these questions – and more – will become clear as you work through crafting the perfect menu for your bagel shop. 

9. Establish Key Operating Infrastructure

Next, you’ll have to choose a supplier. 

Whatever your menu looks like, you’ll want to make sure you’re picking a supplier who can provide all of the ingredients you need. Some questions to keep in mind as you consider the best choice for your bagel shop are: 

• How big is the supplier? Would you prefer a company that’s smaller and more local, or go with a bigger, more established business?

• How reliable are they? Can they make sure your shop is always fully stocked with the ingredients you need? 

• Do you trust them? Is the quality of the food what they say it will be? Are the costs fair?

• What will your customers think? How will they feel about where you get your food products influence consumer behavior? 

• What values feel important to represent in your supplier selection? Do they use sustainable practices? Are their goods ethically sourced? 

Once you choose your supplier, it’ll be important to keep track of your inventory. One option is setting up systems to help you manage what food products you have in stock, prevent food waste, and make sure you’re being as economical as possible with food and other business-related costs.

10. Select Your Equipment and Point of Sale (POS) System

You have your location. You’ve figured out your taxes and expenses, licenses and permits. You’ve marketed your bagel shop. You have your food products. Now, you just need the right equipment to bring your menu to life. 

The tools and appliances you’ll need will depend on the format of your bagel shop – a home kitchen will likely require different equipment than a city bagel stand or highway bagel stop. But no matter what your business looks like, choosing the right equipment for your bagels is essential to meeting your kitchen and customer needs. 

In addition to kitchen equipment, it’s also important to keep restaurant technology in mind. How will customers place orders, whether in-store or online? How will you keep track of sales, payments, and other shop data? Take your time exploring your point of sale (POS) system options and choosing the best fit for your bagel shop. 

11. Map Out Your Floor Plan

This may be step 11, but don’t be fooled. The design of your business is just as important as any other step in this list – because the way your bagel shop is designed is the way your customers will experience it. 

You have an opportunity to build this experience for your customers from the ground up, so what elements will you incorporate to ensure they keep coming back for more? 

As you plan your space, consider some of the following questions:

• How welcoming is your bagel shop? Is it immediately obvious where to get in line, where to order, where to sit? Is your layout easy to navigate? Does it invite customers in or is it overwhelming and confusing?

• How will you leverage the exterior of your space to attract potential customers? Will you go for an attention-grabbing sign or decorations? Will you opt for a more sleek, minimal approach? 

• How comfortable is your space? Will you have a seating area? Indoors, outdoors, or both? Is your furniture clean and inviting? Do you offer amenities like WiFi and public restrooms? 

• What is your shop aesthetic? What’s the lighting like? What artwork, mirrors, or other decor have you incorporated?

The answers to these questions will determine the way people feel and think about your shop – and ensuring those feelings and thoughts are positive is essential to driving revenue and keeping your business afloat. Make sure to take your time thinking about how you’ll cultivate your space to build the best possible overall experience for your customers. 

12. Build Your Team

Congrats! You have everything you need to open your bagel shop. Just one more – very important – question: who are you going to open it with?

You might have all of the components, but they’re not going to put themselves together. The people on your team will determine if and how your vision is realized, so take your time developing a plan for hiring, training, supporting, and retaining your staff to make sure you’re bringing the best people for the job together and setting your bagel shop up for long-term success!

My favorite kind of bagel is plane – because we’re ready for takeoff!

No matter who you are or how much experience you have, cooking up a new concept from scratch can be intimidating. As you work to make your bagel shop vision a reality, remember you can always refer back to this list for any tips, tricks, and guidance you need. And before you know it, you’ll be filling a hole in the market with your deliciously successful bagel business!