A bagel shop is usually a small limited-service shop that bakes and sells bagels, coffee, and other breakfast items. A bagel shop business can be as small as a single location or as big as a national chain. A good number of successful bagel shops are regional, having a few locations in a particular area.

A bagel is a doughnut-shaped yeast-leavened roll that is characterized by a crisp, shiny crust and a dense interior. Long regarded as a Jewish specialty item, the bagel is commonly eaten as a breakfast food or snack, often with toppings such as cream cheese and lox (smoked salmon).

Available statistics show that the market size of the bagel stores industry is $1.8bn in 2022 and it is expected to increase 3.2% in 2022. Researchers estimate that fresh bagels account for $833.04 million in sales every year, while refrigerated bagel sales generate approximately $129.49 million and frozen bagels generate $27.55 million in annual sales at supermarkets, drugstores, and dollar retail chains across the nation.

Steps on How to Start a Bagel Shop Business

  1. Conduct Market Research

If you are considering starting a bagel shop, you would need reliable market research to be able to maximize profits from the business. The first step in the market research process for your bagel shop should be to develop market-based research questions in line with your overall business goal and objective.

In this regard, you should source for information that will help you maximize your business, give you reliable data, and clue of what your potential market will be looking out for from a bagel shop and also help you operate your bagel shop with less stress and build the business to profitability.

a. Who is the Target Market for Bagel Shop Business?

If you are thinking of opening a bagel shop then you should make target demographics all-encompassing. It should include children, students, migrants, entrepreneurs, business people, tourists, and every adult in the neighborhood where your bagel shop will be located.

b. Is Bagel Shop a Profitable Business?

Yes, the bagel shop business is very profitable. According to this statistic, 202.07 million Americans consumed bagels in 2020. This figure is projected to increase to 205.34 million in 2024.

c. Are There Existing Niches in the Industry?

No, there are no existing niches when it comes to the bagel shop business.

d. Who are the Major Competitors?
  • Einstein Bros Bagels. Lakewood, Colorado
  • Thomas’. Horsham, Pennsylvania
  • Sara Lee International. Horsham, Pennsylvania
  • Nature’s Own. Thomasville, Georgia
  • Pepperidge Farm. Norwalk, Connecticut
  • Udi’s. Boulder, Colorado
  • Franz Family Bakeries. Portland, Oregon
  • Trader Joe’s. Monrovia, California
  • Lender’s Bagels. Horsham, Pennsylvania
  • Ray’s New York Bagels. Sharon, Massachusetts
  • LilyPopp Cafe – Anaheim, California
  • Boil & Bake Bagels – Flower Mound, Texas
  • Talia’s Grille – Philadelphia, PA
  • County Farm Bagels – Winfield, Ilinois
  • Bear’s Cup – Bolton, New York
  • Fat Ducks Deli & Bakery – Seattle, WA
  • Tega Cay Gourmet Deli – Tega Cay, SC
  • The Bagel Maker – Panama City, Florida
  • Ozark Mountain Bagel – Bentonville, Arizona
  • Royalicious Bagel Bakery – Charles Town, West Virginia.
e. Are There County or State Regulations or Zoning Laws for Bagel Shop Business?

Yes, there are county and state regulations and zoning laws for bagel shops in the United States. Please note that the Food and Drug Administration (FDA) sets the federal Food Code but it doesn’t oversee individual bagel shops. Instead, the various states use the Food Code as the basis for their food codes. They may adopt its rules, interpret them differently or set their own rules.

It is important to also state that in the United States, you are required to follow your state’s foodservice code. Visit the FDA website for a list of food service codes by state. Use this to find the state authority handling restaurants and bars and view the laws that apply in your state.

f. Is There a Franchise for Bagel Shop Business?

Yes, there are franchise opportunities for bagel shops. Here are some of them;

  • NYC Bagel and Sandwich Shop
  • Davidovich Bakery NYC
  • Big Apple Bagels/My Favorite Muffin
  • Einstein Bros.
  • Dunkin’ Donuts
  • Between Rounds
  • New York Bagel Café & Deli
  • Brooklyn Water Bagel
  • Bagel World
  • Barry Bagels
  • Manhattan Bagel
  • The Great American Bagel Bakery.
g. What Do You Need to Start a Bagel Shop Business?
  • A Feasibility Report
  • Business and Marketing Plans
  • Business Licenses and Permits
  • A Good Shop facility
  • EIN (Employer Identification Number)/Federal Tax ID Number.
  • A Corporate Bank Account
  • Supplies of ingredients
  • Employees
  • Startup Capital
  1. Memorable Bagel Shop Business Names

  • Hunger Zone© Bagel Shop, Inc.
  • Zone Zero® Bagel Shop, LLC
  • Deep Cookers© Bagel Shop, Inc.
  • Lauretta McKenzie® Bagel Shop, Inc.
  • Milky Way™ Bagel Shop, Inc.
  • Francis Highlander™ Bagel Shop, LLC.
  • All Day© Bagel Shop, LLC
  • Donie Silvans® Bagel Shop, Inc.
  • George Finney© Bagel Shop, Inc.
  • Day Fresh© Bagel Shop, Inc.
  • Larry Duncan® Bagel Shop, LLC
  • King Baker® Bagel Shop, LLC
  • Lowey Martins™ Bagel Shop, LLC
  • Benny Blanco© Bagel Shop, Inc.
  • Alex Core® Bagel Shop, Inc.
  • Mouth Full™ Bagel Shop, Inc.
  • Rees Morgan™ Bagel Shop, Inc.
  • Big Bite© Bagel Shop, Inc.
  • Tripple Bites® Bagel Shop, LLC
  • Plaxton Foods™ Bagel Shop, Inc.
  1. Register Your Business

a. What Type of Business Structure is Best for Bagel Shop?

The truth is that there are several options when it comes to the business structure of a bagel shop, but the one that most players in this line of business consider is an LLC. It is common to consider an LLC because providers want to protect themselves from lawsuits.

Please note that an LLC will need an EIN if it has employees or if it will be required to file any of the excise tax forms listed below.

b. Steps to Form an LLC
  • Choose a Name for Your LLC.
  • File Articles of Organization.
  • Choose a registered agent.
  • Decide on member vs. manager management.
  • Create an LLC operating agreement.
  • Comply with other tax and regulatory requirements.
  • File annual reports.
c. What Type of License is Needed to Open a Bagel Shop Business?
  • General Business License
  • Health and Safety Permit
  • Food Handlers’ License
  • Zonal Permits
  • Signage Permit
  • Operational State Facility Inspections
  • A music license if you want to play recorded music in your bagel shop
  • A dumpster placement permit that specifies where you can put your dumpster outside your bagel shop
d. What Type of Certification is Needed to Open a Bagel Shop Business?

You don’t need any certifications to open a bagel shop business.

e. What Documents are Needed to Open a Bagel Shop Business?
  • DBA
  • EIN
  • Business and liability insurance
  • Federal Tax Payer’s ID
  • State Permit and Building Approval
  • Certificate of Incorporation
  • Business License
  • Business Plan
  • Employment Agreement (offer letters)
  • Operating Agreement for LLCs
  • Insurance Policy
  • Online Terms of Use
  • Online Privacy Policy Document
  • Contract Document
  • Company Bylaws
  • Memorandum of Understanding (MoU)
f. Do You Need a Trademark, Copyright, or Patent?

If you are considering opening a bagel shop business, usually you may not have any need to file for intellectual property protection or trademark. This is because the nature of the business makes it possible for you to successfully run it without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.

  1. Cost Analysis and Budgeting

a. How Much Does It Cost to Start a Bagel Shop Business?

There is no clear-cut startup cost for a bagel shop, but available data shows that the cost of starting a bagel shop ranges between $35,000 to $250,000. But if you intend to buy a bagel shop franchise, then you should look towards spending approximately $350,000.

b. What are the Costs Involved in Starting a Bagel Shop
  • Business Registration Fees – $750.
  • Legal expenses for obtaining licenses and permits – $1,300.
  • Marketing, Branding and Promotions – $1,000.
  • Business Consultant Fee – $2,500.
  • Insurance – $1,400.
  • Rent/Lease – $35,000.
  • Other start-up expenses include commercial satellite TV subscriptions, phone and utility deposits ($1,800).
  • Operational Cost (salaries of employees, payments of bills et al) – $30,000
  • Start-up Inventory – $15,000
  • Store Equipment (cash register, security, ventilation, signage) – $1,750
  • Furnishing and Equipping the Shop and Kitchen – $50,000
  • Website: $600
  • Opening party: $3,000
  • Miscellaneous: $2,000
c. What Factors Determine the Cost of Opening a Bagel Shop Business?
  • The size of the bagel shop
  • The choice of location
  • The required licenses and permits
  • The types of bagels (boiled, baked, and golden-brown bagels) and related products
  • The cost for branding, promotion, and marketing of the bagel shop
  • The cost for furnishing and equipping the facility
  • The cost of insurance
  • The cost for registering the business
  • Source of your supplies and ongoing expenses
  • Cost of recruiting and training your staff
  • The cost for the purchase and customizing of uniforms
  • The cost for the grand opening of the bagel shop business
d. Do You Need to Build a Facility? If YES, How Much Will It Cost?

It is not compulsory to build a new facility for your bagel shop business, but if you have the required finance, it will pay you to build your facility. The truth is that building or reconstructing a facility will help you come up with a facility that will perfectly fit into your overall business goals and vision.

e. What are the Ongoing Expenses of a Bagel Shop Business?
  • Supplies (inventory expenses)
  • Utility bills (internet subscriptions, phone bills, signage and software renewal fees et al)
  • Salaries of employees
f. What is the Average Salary of your Staff?
  • Shop Manager (Owner) – $45,000 Per Year
  • Accountant – $32,630,000 Per Year
  • Bakers – $30,000 Per Year
  • Delivery Guys – $28,100 Per Year
  • Cleaners – $25,000 Per Year
  • Security Guard -$24,000 Per Year
g. How Do You Get Funding to Start a Bagel Shop Business
  • Raising money from personal savings and sale of personal stocks and properties
  • Raising money from investors and business partners
  • Sell shares to interested investors
  • Applying for a loan from your bank/banks
  • Source for soft loans from your family members and friends.
  1. Write a Business Plan

a. Executive Summary

Big Bite© Bagel Shop, Inc. is a registered bagel shop business that will be located in one of the busiest business and residential districts in San Francisco, California. We have been able to lease a shop facility along a major road that can fit into the kind of bagel shop that we intend launching and the shop facility is located in a corner piece property directly opposite the largest shopping mall in San Francisco, California.

b. Products and Service
  • Different types of bagels (boiled, baked, chocolate chip bagels, cinnamon raisin bagels, blueberry bagels, salt bagels, poppy seed bagels, and golden-brown bagels)
  • Coffee
  • Beverages and water
c. Mission Statement

Our mission is to establish a bagel shop business whose bagels will be celebrated for their tender, chewy texture and refined taste. We want to be one of the top 10 largest bagel brands in the United States.

Vision Statement

Our vision is to build a business that will not just sell bagels but a business of global-minded entrepreneurs.

d. Goals and Objectives

The goals and objectives of a bagel shop business are to provide a retail outlet where patrons can go to buy or order bagels if the shop has delivery options.

c. Organizational Structure
  • Shop Manager (Owner)
  • Accountant
  • Bakers
  • Delivery Guys
  • Cleaners
  • Security Guard

Marketing Plan

a. SWOT Analysis
Strength:
  • Ideal location for a bagel shop business
  • Highly experienced and qualified employees and management
  • Access to finance from business partners
  • Unique bagel recipe.
  • Reliable and efficient inventory management system.
Weakness:
  • Financial constraints may restrict the publicity and branding of the business
  • A new business that will be competing with well-established bagel shops in the city.
  • Inability to retain our highly experienced employees longer than we want during the teething stage of the business.
Opportunities:
  • Bagels are Popular
  • They are quite Affordable
  • Ability to Cater to Everyone
  • It’s a Niche Restaurant Type
  • It’s Easier to Franchise
  • You Can Be More Creative
  • More Financial Aid Options
  • Online market, new services, new technology, and of course the opening of new markets.
Threat:
  • The arrival of new bagel shop within our market space
  • Economic uncertainty
  • Liability problems
  • The U.S. Food and Drug Administration (FDA) could change its regulatory status and decide to enforce strict regulations that can strangulate new businesses like ours.
b. How Do Bagel Shops Make Money?

Bagel shops make money by selling the following products;

  • Different types of bagels (boiled, baked, chocolate chip bagels, cinnamon raisin bagels, blueberry bagels, salt bagels, poppy seed bagels, and golden-brown bagels)
  • Coffee
  • Beverages and water
  • Franchise
c. Payment Options
  • Payment with cash
  • Payment via credit cards
  • Payment via online bank transfer
  • Payment via mobile money transfer
d. Sales & Advertising Strategies
  • Introduce your bagel shop business by sending introductory letters alongside your brochure to households, gyms, schools, socialites, and other key stakeholders throughout the city where your bagel shop business is located.
  • Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
  • Create a basic website for your business to give your business an online presence
  • Directly market your products.
  • Engage in roadshows in targeted communities from time to time to promote your bagel shop
  • Join local bagel shop associations for industry trends and tips
  • Provide discount days for your customers
  • Advertise our business in community-based newspapers, local TV and radio stations
  • List your business on yellow pages ads (local directories)
  • Encourage the use of word-of-mouth marketing (referrals)

Financial Projection

a. How Much Should You Charge for your Product/Service?

The price of a bagel depends on the size and type of bagel but the median prices of bagels range from $1.80 to as much as $3.00.

b. How Much Profit Do Bagel Shop Owners Make a Year?

According to industry reports, the average bagel costs around $1.80 -$3.00, while other food items tend to vary depending on location and production cost. However, note that your annual revenue as a bagel shop owner will depend on the number of sales you have per day and the average amount spent per customer.

If, for instance, you have 100 sales per day with an average sale of $6.00 for a bagel and coffee and you’re open 7 days a week, then your revenue per year will be $219,000.

c. What Factors Determine the Amount of Profit to Be Made?
  • The capacity of the bagel shop
  • The types of bagels and related products retailed in the shop
  • The location the bagel shop is covering
  • The management style of the bagel shop
  • The business approach of the bagel shop
  • The advertising and marketing strategies adopted by the bagel shop.
  • The number of years the bagel shop is in business
d. What is the Profit Margin of a Bagel Shop?

On average, bagel shops tend to have an overall profit margin of between 7.5% and 13% annually.

e. What is the Sales Forecast?

Below is the sales forecast for a bagel shop. It is based on the location of the business and other factors as it relates to such startups in the United States;

  • First Fiscal Year: $320,000
  • Second Fiscal Year: $450,000
  • Third Fiscal Year: $600,000
  1. Set Up your Shop 

a. How Do You Choose a Perfect Location for Bagel Shop?
  • The demography of the location especially as it relates to people that eat bagels regularly
  • The demand for bagels in the location
  • The purchasing power of businesses and residents of the location
  • Accessibility of the location
  • The number of bagel shops, and related businesses in the location
  • The local laws and regulations in the community/state
  • Traffic, parking and security et al
b. What State and City are Best to Open a Bagel Shop?
  • Horsham, Pennsylvania
  • Dallas-Fort Worth, Texas
  • Atlanta, Georgia
  • Boston, Massachusetts
  • Palm Beach, Florida
  • Las Vegas, Nevada
  • Los Angeles, California
  • New York City, New York
  • San Francisco, California
  • Sharon, Massachusetts.
c. What Equipment is Needed to Operate a Bagel Shop?
  • Industrial Oven
  • Dough Cutters.
  • Dough Scrapers.
  • Sauce ladles & spoons.
  • Dough boxes and lids.
  • Dough box trolleys.
  • Sauce dispensers
  • Bagel boxes
  • Heat-resistant gloves
  • Bagel delivery bag.
  1. Hire Employees

When it comes to hiring employees for a standard bagel shop, you should make plans to hire a competent shop manager (you can occupy this position), account clerk, bakers, delivery guys, cleaners, and security guard.

  1. Launch the Business Proper

In recent times, no bagel shop opens its door for business without first organizing an opening party to officially launch the business. You can choose to do a soft opening if you are operating on a low budget or you can go for a grand opening party. The bottom line is that with a proper launching of the bagel shop, you will be able to officially inform people in your city that your bagel shop is open for business.

a. What Makes a Bagel Shop Business Successful?
  • Choose a good location and shop facility to launch the business
  • Make available varieties of bagels (give your customers options)
  • Be deliberate with your marketing sales approach
  • Encourage the use of word of mouth to promote your bagel shop business
  • Leverage on all available online and offline platforms to promote your bagel shop business
b. What Happens During a Typical Day at a Bagel Shop?

A typical day at a bagel shop begins with the owner making bagels, brewing coffee, and preparing other food items. As the morning progresses, everything about the business picks up and business owners move from prepping foods and drinks to serving customers. As business becomes slower later in the day, work then shifts towards cleaning and getting ready for the next day.

c. What Skills and Experience Do You Need to Build a Bagel Shop Business?
  • Excellent baking and culinary skills
  • Excellent customer services skills
  • Interpersonal skill
  • Accounting and bookkeeping skills
  • Business management skills
  • Bargaining skill
  • Work experience in a bagel shop environment
  • Experience in managing people
  • Experience in business administration
  • Experience in making different types of bagels.