A cake business plan is a plan for hours. The flour, butter and sugar in a celebration cake cost about $26; the four hours of baking, filling, coating, decorating and answering messages cost $80 at a fair wage, and a custom cake can take twice that. So the plan has to pay every hour, price each size from its own cost, and know how many cakes a week the hours allow. In the example below, a cake studio in New Mexico sells celebration cakes in two sizes, wedding cakes and cupcakes, and ends its first year about $13,800 ahead on $79,200 of sales, after paying $20 an hour for about 1,700 hours of baking and decorating. Below is a description example, each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Describe the studio in a paragraph: the cakes, the sizes, who orders, the goals.
- Cost each cake from the materials up, and pay every hour: baking, decorating, the order itself.
- Price each size from its own cost; a price per serving makes small cakes pay for big ones.
- Wedding cakes are the biggest sales and the most hours; tastings and delivery are part of the cost.
- The hours, not the ovens, are what limit the month.
- TaroStack keeps layers, buttercream and fillings as sub-recipes, costed at what you paid. More below.
Part 1: the business description
Desert Rose Cake Studio, a made-up cake studio in Albuquerque, New Mexico, I use in these examples, writes:
Desert Rose Cake Studio bakes custom celebration cakes, wedding cakes and cupcakes to order in a shared commercial kitchen, with an owner who decorates and a part-time baker, sold through the website, bridal shows and word of mouth.
Part 2: what each cake costs
| Per unit | Celebration cake, 8 in | Celebration cake, 6 in | Wedding cake, 3 tiers | Cupcakes, a dozen |
|---|---|---|---|---|
| Layers, buttercream, filling, board, box, decorations | $26.00 | $16.64 | $120.00 | $8.50 |
| Hours at $20: baking, filling, decorating, the order | $80.00 (4 h) | $65.00 (3.25 h) | $240.00 (12 h) | $20.00 (1 h) |
| Delivery and setup at the venue | $60.00 | |||
| Card fees, 3% | $5.70 | $4.35 | $19.50 | $1.26 |
| Variable cost | $111.70 | $85.99 | $439.50 | $29.76 |
The hours are more than half of every cake's cost, and nearly three quarters of a celebration cake's. A 6-inch cake has less in it than an 8-inch but nearly as many hours, so its cost a serving is higher; price each size from its own cost, as in how to price cakes. How to work out an hourly rate for baking is in how to compute labor cost in baking.
Part 3: customers and prices
| Product | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Celebration cake, 8 inch, three layers, 20 servings | $190.00 | $111.70 | $78.30 | 41.2% | 25 |
| Celebration cake, 6 inch, three layers, 12 servings | $145.00 | $85.99 | $59.01 | 40.7% | 20 |
| Wedding cake, three tiers, 100 servings, delivered | $650.00 | $439.50 | $210.50 | 32.4% | 4 |
| Cupcakes, a dozen | $42.00 | $29.76 | $12.24 | 29.1% | 30 |
The 8-inch cakes bring about $1,960 of the month's $4,350 of contribution, the 6-inch about $1,180, the four weddings about $840 and the cupcakes about $370. A wedding cake is $6.50 a serving and leaves $210 after 14 hours; two celebration cakes take a little over half those hours and leave $156. Cupcakes leave the least for each hour, and they're what fills a slow week. Pricing the rest of a bakery's case is in how to price baked goods.
Part 4: the first year, month by month
Fixed costs are $1,345 a month: the shared commercial kitchen ($800), insurance ($80), the website and ordering ($50), bridal shows and marketing averaged ($200), wedding tastings ($100), delivery fuel ($80), and software and card fees ($35). Sales start at 15% of full speed and reach it in month 11:
| Month | 8-inch cakes | 6-inch cakes | Wedding cakes | Cupcake dozens | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|---|
| 1 | 4 | 3 | 1 | 5 | $2,055 | −$583 | −$583 |
| 2 | 5 | 4 | 1 | 6 | $2,432 | −$434 | −$1,017 |
| 3 | 6 | 5 | 1 | 8 | $2,851 | −$272 | −$1,288 |
| 4 | 8 | 6 | 1 | 9 | $3,418 | −$44 | −$1,332 |
| 5 | 10 | 8 | 2 | 12 | $4,864 | $478 | −$854 |
| 6 | 13 | 10 | 2 | 15 | $5,850 | $868 | $13 |
| 7 | 15 | 12 | 2 | 18 | $6,646 | $1,179 | $1,192 |
| 8 | 18 | 14 | 3 | 21 | $8,282 | $1,779 | $2,971 |
| 9 | 20 | 16 | 3 | 24 | $9,078 | $2,090 | $5,062 |
| 10 | 23 | 18 | 4 | 27 | $10,714 | $2,691 | $7,752 |
| 11 | 25 | 20 | 4 | 30 | $11,510 | $3,002 | $10,754 |
| 12 | 25 | 20 | 4 | 30 | $11,510 | $3,002 | $13,756 |
The year's sales are $79,210 and the profit $13,756, after paying $20 an hour for every hour of baking, decorating, ordering and delivering: about 250 hours a month at full speed, the owner and a part-time baker, and about 1,700 hours in the year, or $34,000. Cash falls to −$1,332 by month 4, so the plan keeps $2,500 of working cash, and every order takes a deposit. Weddings cluster in spring and fall; the projection grows evenly, so plan the hours for them.
Part 5: the startup budget
| Item | Example |
|---|---|
| Planetary mixer, 20 quart | $3,000 |
| Pans and baking tools | $800 |
| Turntables, airbrush and decorating tools | $600 |
| Cake fridge | $1,500 |
| Delivery boxes and non-slip mats | $300 |
| Bridal show booth | $1,200 |
| Website and photos | $1,000 |
| Working cash | $2,500 |
| Total to start | $10,900 |
A cake studio that bakes at home instead of in a shared kitchen may be able to under its state's cottage food law, for cakes that don't need refrigeration; cream cheese frostings and fresh fruit fillings generally do. Which foods those laws allow is in how to start a cottage food business. At $13,800 a year, the $8,400 spent before working cash is earned back by month 11.
Get the template
Download the cake business plan workbook. Four sheets: your cakes and cupcakes with price, variable cost and a month's volume at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Three cake flavors, five buttercreams and four fillings, each made in a batch and used across a week of orders, a wedding on Saturday that needs three tiers baked on Thursday, and butter that went up again. A notebook can't say what an 8-inch cake costs this month, whether there's enough buttercream for Saturday, or which orders this week need the lemon curd.
How TaroStack does it
TaroStack keeps layers, buttercream and fillings as sub-recipes, costed at what you paid.
Sub-recipes. The vanilla layers, the buttercream and the lemon curd are each a recipe, and a cake is a recipe of its layers, buttercream, filling, board and box, so when butter goes up, the buttercream's cost follows, and so does every cake that uses it.
Batches for the week. A batch of buttercream takes its butter and sugar off stock and makes a quantity you can use across the week's cakes, and "what could I make right now" says whether there's enough for Saturday.
Orders by day. Each cake order is a sales order for its pickup or delivery day, so the week's cakes and what they need are one list, and the price creep report shows which supplier raised the butter.
| The job | Notebook | In TaroStack |
|---|---|---|
| What an 8-inch cake costs now | Last year's sheet | A recipe, at what you paid |
| Enough buttercream for Saturday? | Look in the fridge | What could I make right now |
| This week's orders and what they need | A calendar and a list | Sales orders by day |
| Butter that went up | The receipt, if you look | Price creep by supplier |
Recipes with sub-recipes, batches and sales orders are on every plan, from $49 a month. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.