How to buy a bakery

For many entrepreneurs, the idea of owning a bakery is an attractive proposition. Bakeries can generate cash flow anywhere between $17,971 and $600,000 a year, with an average cash flow of around $158,770.31 annually.

Here are the details on the revenue and cost to acquire a bakery, plus how to purchase a bakery in 2024. And, we include the best financing options for funding your business.

How much does a bakery make?

The average bakery* has an annual net cash flow of $158,770.31. This equates to roughly $13,230.86 a month over a span of a year. However, the profitability of your bakery business comes down to its location, size, rent, wages and more.

Chart: Cash flow range of bakeries currently listed for sale

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• View cash flow data table

  Bakery	Annual net cash flow
  1	$17,971
  2	$19,733
  3	$25,000
  4	$27,497
  5	$32,002
  6	$32,173
  7	$32,282
  8	$36,874
  9	$37,126
  10	$37,873
  11	$40,000
  12	$41,923
  13	$42,594
  14	$42,915
  15	$43,000
  16	$50,000
  17	$54,000
  18	$54,000
  19	$54,764
  20	$56,000
  21	$58,434
  22	$59,901
  23	$60,000
  24	$60,000
  25	$60,000
  26	$60,000
  27	$60,717
  28	$61,308
  29	$63,373
  30	$65,000
  31	$69,225
  32	$70,496
  33	$72,000
  34	$75,000
  35	$75,000
  36	$75,000
  37	$80,000
  38	$81,146
  39	$82,365
  40	$86,000
  41	$86,857
  42	$88,000
  43	$93,772
  44	$95,000
  45	$99,000
  46	$99,000
  47	$100,000
  48	$100,000
  49	$100,000
  50	$100,000
  51	$100,560
  52	$101,939
  53	$102,804
  54	$106,289
  55	$107,851
  56	$110,000
  57	$110,000
  58	$111,076
  59	$111,869
  60	$114,946
  61	$115,000
  62	$115,024
  63	$120,000
  64	$120,000
  65	$120,000
  66	$120,916
  67	$122,182
  68	$125,000
  69	$126,090
  70	$129,504
  71	$130,000
  72	$133,000
  73	$133,369
  74	$140,000
  75	$140,000
  76	$143,000
  77	$145,791
  78	$150,000
  79	$161,000
  80	$163,000
  81	$163,000
  82	$163,399
  83	$164,234
  84	$165,519
  85	$168,010
  86	$168,056
  87	$168,793
  88	$169,520
  89	$171,286
  90	$175,000
  91	$175,000
  92	$175,000
  93	$175,000
  94	$175,000
  95	$177,000
  96	$177,982
  97	$183,000
  98	$194,458
  99	$196,050
  100	$206,080
  101	$215,952
  102	$219,000
  103	$237,737
  104	$247,381
  105	$250,000
  106	$250,001
  107	$261,769
  108	$271,608
  109	$271,642
  110	$272,485
  111	$275,500
  112	$275,640
  113	$276,280
  114	$279,000
  115	$290,000
  116	$300,000
  117	$303,000
  118	$356,706
  119	$363,687
  120	$364,338
  121	$375,000
  122	$428,233
  123	$441,404
  124	$509,051
  125	$519,390
  126	$545,365
  127	$550,283
  128	$575,000
  129	$600,000

How to buy a bakery

1. Find a bakery for sale. You can find bakeries for sale locally or online. Online you can search "bakeries for sale near me" to find a list of business or broker websites that lists bakeries for sale. It's important to also take note of your finances by knowing how much you have saved towards the purchase of a new business, as well as how much you may need to borrow to buy the business.
2. Figure out what the business is worth. Use various valuation methods to get a general idea of the fair market value of the business you're trying to buy to make sure you're getting a good deal.
3. Do your due diligence on owning and operating a bakery. You'll want to weigh the pros and cons before taking the jump. Consider important factors that can affect the profitability of the business you're buying such as location, equipment, utilities and maintenance.
4. Get a business loan and make an offer. Unless you have a lot of cash on hand, you'll need a business loan to finance the purchase of a bakery. Check out our top picks of lenders for a bakery business loan. Once you're ready to buy, contact and negotiate with the seller or agent of the business and finalize your offer. It may be helpful to have a lawyer look over any negotiations and final contracts.

Our top picks for a bakery business loan

Cost of buying bakeries

The average bakery for sale costs $516,912.42*. Although prices vary widely depending on the location, the age of equipment and whether you're purchasing real estate as part of the deal. Many are listed well below the average price, and some are much higher than the average price, especially in urban locations.

With the average annual cash flow of a bakery at $158,770, you can expect to make back your investment in roughly 3.26 years - this translates roughly to a 30.72% APY.

Chart: Cost of bakeries available for sale

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• View cost data table

  Bakery	Annual net cash flow
  1	$35,000
  2	$60,000
  3	$65,000
  4	$65,000
  5	$70,000
  6	$75,000
  7	$75,000
  8	$89,000
  9	$95,000
  10	$95,000
  11	$99,000
  12	$99,000
  13	$99,000
  14	$105,000
  15	$110,000
  16	$125,000
  17	$125,000
  18	$125,000
  19	$125,000
  20	$139,455
  21	$145,000
  22	$145,000
  23	$149,000
  24	$149,000
  25	$149,000
  26	$149,999
  27	$150,000
  28	$150,000
  29	$150,000
  30	$159,000
  31	$159,000
  32	$160,000
  33	$160,000
  34	$169,000
  35	$169,900
  36	$169,999
  37	$170,000
  38	$175,000
  39	$175,000
  40	$175,000
  41	$195,000
  42	$195,000
  43	$195,000
  44	$196,000
  45	$199,000
  46	$199,000
  47	$199,000
  48	$200,000
  49	$200,000
  50	$210,000
  51	$210,000
  52	$225,000
  53	$225,000
  54	$225,000
  55	$225,000
  56	$230,000
  57	$239,000
  58	$239,000
  59	$245,000
  60	$250,000
  61	$250,000
  62	$250,000
  63	$250,000
  64	$265,000
  65	$275,000
  66	$279,000
  67	$285,000
  68	$288,000
  69	$289,000
  70	$289,000
  71	$299,000
  72	$299,000
  73	$299,000
  74	$300,000
  75	$324,000
  76	$324,000
  77	$325,000
  78	$325,000
  79	$335,000
  80	$349,000
  81	$360,000
  82	$395,000
  83	$399,000
  84	$399,900
  85	$400,000
  86	$405,000
  87	$410,000
  88	$415,000
  89	$425,000
  90	$450,000
  91	$450,000
  92	$495,000
  93	$499,000
  94	$499,000
  95	$500,000
  96	$550,000
  97	$550,000
  98	$550,000
  99	$575,000
  100	$575,500
  101	$576,000
  102	$649,950
  103	$650,000
  104	$695,000
  105	$700,000
  106	$740,000
  107	$750,000
  108	$759,000
  109	$795,000
  110	$895,000
  111	$899,000
  112	$900,000
  113	$923,000
  114	$999,999
  115	$1,000,000
  116	$1,098,000
  117	$1,200,000
  118	$1,395,000
  119	$1,400,000
  120	$1,500,000
  121	$1,550,000
  122	$1,700,000
  123	$1,750,000
  124	$1,800,000
  125	$2,100,000
  126	$2,400,000
  127	$2,500,000
  128	$2,850,000
  129	$6,950,000

Cost, revenue and cash flow of a bakery

The average price-to-cash flow (P/CF) ratio of a bakery business is 3.26. The P/CF ratio measures how much cash a company generates relative to its price. You might've heard of the term price-to-earning ratio (P/E ratio) before, which is a more commonly known ratio. Essentially, this measures how much you are paying for each dollar of the company's earnings.

The average operating cash flow margin of a bakery business is 0.18. The operating cash flow margin can be calculated by dividing operating cash flow by revenue. The operating cash flow margin reveals how effectively a company converts its sales to cash.

The average price-to-sales (P/S) ratio of a bakery business is 167%. The P/S ratio measures the revenue of the business divided by the cost, which indicates the percentage of the revenue you are paying for the company. Typically the lower the percentage, the better. However, it's best to look at a company's P/S ratio in comparison to the P/S ratios of similar companies in the same industry.

Chart: Cost, revenue, and cash flow breakdown of the lowest priced bakeries currently listed for sale

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• View data table

  Bakery	Cost	Revenue	Cost flow
  1	$35,000	$22,299	$17,971
  2	$60,000	$335,398	$42,915
  3	$65,000	$175,000	$75,000
  4	$65,000	$360,000	$60,000
  5	$70,000	$224,848	$19,733
  6	$75,000	$150,000	$56,000
  7	$75,000	$504,212	$54,764
  8	$89,000	$202,884	$37,126
  9	$95,000	$310,000	$40,000
  10	$95,000	$314,364	$42,594

Chart: Cost, revenue, and cash flow breakdown of the highest priced bakeries currently listed for sale

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• View data table

  Bakery	Cost	Revenue	Cost flow
  1	$6,950,000	$11,046,107	$250,001
  2	$2,850,000	$2,400,000	$575,000
  3	$2,500,000	$4,270,398	$441,404
  4	$2,400,000	$1,279,229	$363,687
  5	$2,100,000	$1,607,000	$356,706
  6	$1,800,000	$1,916,877	$545,365
  7	$1,750,000	$3,100,000	$600,000
  8	$1,700,000	$1,714,084	$550,283
  9	$1,550,000	$3,620,497	$519,390
  10	$1,500,000	$2,900,000	$303,000

Steps to buying a bakery

Buying this type of business involves finding one for sale, running the numbers and getting the right financing.

1. Search business listings

Start your search by Googling "bakeries for sale near me." This brings up a list of business or broker websites with this type of business for sale in your area. From there, you can search listings and contact the seller or agent to get more information. Loopnet.com, Bizbuysell.com and us.businessesforsale.com are also good places to start your search.

2. Determine what the business is worth

Determining what a business is worth is both an art and a science. While this is by no means a complete list of the valuation methods available, you can get a general idea of the fair market value of a business with these calculations.

1. Times revenue method. This is calculated by taking the revenue generated by a business over a certain period times a multiplier. The multiplier depends on the industry. For example, a retail company may be valued at 2.45x revenue, while a restaurant may be valued at 2.12x revenue.
2. Liquidation value. This value is calculated by adding up everything a business owns, including real estate, equipment and inventory, and then subtracting the company's liabilities and debts. This can give you a rough estimate of what a business is worth, although it doesn't take into account future earnings.
3. Discounted cash flow method. This calculation is based on projections of the future cash flows of a business, then discounts them to today based on inflation. It's a complex calculation best determined by using an NPV calculator.

Always consult with a qualified financial advisor if you have questions. In particular, look for a professional with the Accredited in Business Valuation (ABV) designation, which means they specialize in business valuation.

3. Do your due diligence

In addition to understanding what a particular business is worth, it's important to take into account the pros and cons before signing on the dotted line.

Here's a list of the top factors to consider:

• Location. The most successful businesses are located in areas with a lot of retail stores and traffic. However, consider the type of customers you foresee frequenting your establishment and their specific needs.
• Equipment. If your business requires special equipment, new equipment is more expensive upfront but can bolster your bottom line with reduced energy costs, less maintenance and more customers through the door.
• Competition. Consider the local competition and what sets your business offering apart.
• Utilities. If your business relies heavily on electricity, gas, water, trash and sewage services, you'll want to analyze the availability of these services and their costs carefully.
• Insurance. This is a must-have for any public-facing business. You'll want to make sure you have sufficient coverage to pay for a range of unforeseen circumstances.
• Maintenance. Who will do the repairs, mop the floors or answer the phone? While this business can be a part-time operation, no business is maintenance-free.
• Security. Depending on the location, your business may require extra security features, like cameras.

As with any large business purchase, be sure to educate yourself thoroughly about buying and running that type of business. Many online resources are available from experts who can offer in-depth guidance for your particular industry.

4. Get financing and make an offer

Business loans come in a wide range of flavors, but the most commonly used types for buying a new business or business assets include SBA loans, like the SBA 7(a), 504 and microloan lending programs, equipment loans or personal loans. These loans are offered by banks, credit unions and online lenders.

Online business loan marketplaces like Lendio, Lendzi and Businessloans.com can also be a good place to start your search. You'll want to compare multiple loan types across several lenders to find the best deal.

Dive deeper: Average business loan rates by type

How to finance a bakery

Bakeries can be financed with these options:

• Personal finances. Cash from savings, an inheritance or from selling another business can be an ideal way to finance your purchase.
• SBA loan programs. The SBA 7(a) loan program could potentially be used to purchase this type of business. To qualify, you need to have a 700+ score, a minimum 20% down payment and financial statements from the business of interest.
• Personal loan. Because they don't have a time-in-business or revenue requirement, personal loans can be another way to finance your purchase, especially if you can get a competitive rate.
• Equipment loan. Equipment loans can sometimes be used to finance this type of business equipment, depending on the business's eligibility. But it may be trickier to get an equipment loan if your business is a mostly cash business or considered a restricted business.

Tip: If you're going for an SBA loan to purchase your business, try to find a preferred SBA lender to help push your application through faster.

Steps to get a loan for a bakery

Here are the steps to apply for a business loan:

1. Check your eligibility. This step involves checking your personal score and determining if you have any collateral to pledge if you choose a secured loan.
2. Gather your documentation. These typically include bank statements, tax returns, the business's financial statements and a personal guarantee.
3. Complete the application. Fill out the full application, upload documents or link your financial accounts and review the application for accuracy.
4. Wait for approval and funding. Next, you need to wait for approval and funding. SBA loans can take weeks to months to process.

Dive deeper: How to get a business loan

Where to buy a bakery

We've found bakeries publicly listed for sale in the following states. Updated daily.

• View location data table

  State	# of bakeries for sale
  Arizona	2
  California	6
  Colorado	6
  Connecticut	7
  Florida	16
  Georgia	1
  Hawaii	1
  Idaho	1
  Illinois	3
  Iowa	1
  Maine	1
  Maryland	2
  Massachusetts	3
  Michigan	6
  Minnesota	2
  Mississippi	1
  Missouri	4
  Montana	1
  Nevada	2
  New Jersey	12
  New Mexico	2
  New York	28
  North Carolina	4
  North Dakota	1
  Ohio	3
  Oregon	3
  Pennsylvania	3
  South Carolina	5
  South Dakota	3
  Tennessee	2
  Texas	12
  Virginia	3
  Washington	3
  Wisconsin	1

The annual cash flow of the bakeries range from $17,971 to $600,000.

Chart: Cash flow of bakeries that are currently listed for sale

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• View cash flow data table

  Bakery	Annual net cash flow
  1	$17,971
  2	$19,733
  3	$25,000
  4	$27,497
  5	$32,002
  6	$32,173
  7	$32,282
  8	$36,874
  9	$37,126
  10	$37,873
  11	$40,000
  12	$41,923
  13	$42,594
  14	$42,915
  15	$43,000
  16	$50,000
  17	$54,000
  18	$54,000
  19	$54,764
  20	$56,000
  21	$58,434
  22	$59,901
  23	$60,000
  24	$60,000
  25	$60,000
  26	$60,000
  27	$60,717
  28	$61,308
  29	$63,373
  30	$65,000
  31	$69,225
  32	$70,496
  33	$72,000
  34	$75,000
  35	$75,000
  36	$75,000
  37	$80,000
  38	$81,146
  39	$82,365
  40	$86,000
  41	$86,857
  42	$88,000
  43	$93,772
  44	$95,000
  45	$99,000
  46	$99,000
  47	$100,000
  48	$100,000
  49	$100,000
  50	$100,000
  51	$100,560
  52	$101,939
  53	$102,804
  54	$106,289
  55	$107,851
  56	$110,000
  57	$110,000
  58	$111,076
  59	$111,869
  60	$114,946
  61	$115,000
  62	$115,024
  63	$120,000
  64	$120,000
  65	$120,000
  66	$120,916
  67	$122,182
  68	$125,000
  69	$126,090
  70	$129,504
  71	$130,000
  72	$133,000
  73	$133,369
  74	$140,000
  75	$140,000
  76	$143,000
  77	$145,791
  78	$150,000
  79	$161,000
  80	$163,000
  81	$163,000
  82	$163,399
  83	$164,234
  84	$165,519
  85	$168,010
  86	$168,056
  87	$168,793
  88	$169,520
  89	$171,286
  90	$175,000
  91	$175,000
  92	$175,000
  93	$175,000
  94	$175,000
  95	$177,000
  96	$177,982
  97	$183,000
  98	$194,458
  99	$196,050
  100	$206,080
  101	$215,952
  102	$219,000
  103	$237,737
  104	$247,381
  105	$250,000
  106	$250,001
  107	$261,769
  108	$271,608
  109	$271,642
  110	$272,485
  111	$275,500
  112	$275,640
  113	$276,280
  114	$279,000
  115	$290,000
  116	$300,000
  117	$303,000
  118	$356,706
  119	$363,687
  120	$364,338
  121	$375,000
  122	$428,233
  123	$441,404
  124	$509,051
  125	$519,390
  126	$545,365
  127	$550,283
  128	$575,000
  129	$600,000

*Based on 129 bakery that are listed for sale from businessesforsale.com.

Sources

• businessesforsale.com

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