From humble beginnings to sweet success: Bakingo’s recipe for a Rs.75 crore empire

Is it possible to start a bakery with Rs 20-25 lakh and grow it to a Rs 75 crore business in just five years? It may seem unbelievable, but that’s exactly what Bakingo managed to do. Created in 2016 with four employees and a surplus of initiative, the online bakery now serves 37 cities with 103 cloud kitchens. So, what does it take to run a successful online bakery?

If you were to refer to Shrey Sehgal, co-founder of Bakingo, the secret recipe lists several ingredients: identifying a niche, developing the product, consistency of flavor, packaging and delivery, the right staff and the meaning of marketing.

The journey began when Sehgal realized that despite the growing food market in India, there was no brand dedicated exclusively to cakes. “There were brands for all the fast food options like burgers and pizza, but no go-to place for bakeries,” says Sehgal.

Back then, bakeries only offered cakes with traditional designs and a limited variety. Sehgal, along with his friends Himanshu Chawla and Suman Kumar Patra, saw the gap and focused on quality and unique designs to carve a niche for Bakingo. “I got seed capital for my first business, Flower Aura, launched in 2010-11, which was a success. Most of the profits from Flower Aura were used for expenses such as rental, hiring and delivery of equipment,” says Sehgal. Today, the combined turnover of Flower Aura and Bakingo is Rs.200 crore.

Sehgal was still studying for his master’s degree at MDI Gurugram at the time. So he set up Bakingo’s first office in a basement near the MDI campus for convenience. Operations and product development took place here before expanding to other locations. The emphasis was on perfecting recipes over a period of two to three months through rigorous daily tastings to establish standards of quality and flavor. “Once you create a remarkable product, consistency is key,” says Sehgal. “When customers come back, they want the same taste as 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 example, took advantage of the lack of branded and quality cakes. This will help you build a loyal customer base.
STEP 2
Get the licenses
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 an ESI certificate. If you hire a professional, it should cost you around Rs 16,000-17,000.
STEP 3
Establish a budget
Sehgal recommends starting with a budget of Rs.5-10 lakh, which provides a cushion for professional installation. If you are planning to start locally, even Rs.3 lakh can serve as a starting point. Keep your finances tight and grow gradually.
STEP 4
Hire the right team
If you don’t develop recipes yourself, start with a chef, 2-3 delivery people and someone to manage the technical side, like the website and orders.
STEP 5
Perfect your recipes
Food quality and consistency of flavor are non-negotiable. Collaborate with your chef to create unique, high-quality recipes. Differentiation is essential; 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. As a first step, consider managing deliveries in-house to ensure quality. Partnering with aggregators like Zomato or Swiggy can wait until your operations and volumes are stable.
STEP 7
Using social media for marketing
Social media platforms like Instagram and Facebook are your best friends when you’re starting out. Showcase your products, interact with your audience and create buzz. Start small with a daily advertising budget of Rs.500 to effectively target local customers.

Delivery, however, was more difficult than baking because the cakes are difficult to transport. At first, they only took orders on their website, Bakingo. com. They had an in-house team to handle deliveries and staff were trained to handle the cakes with care.

When they started teaming up with food delivery aggregators, they were skeptical about their ability to provide transportation. “We were afraid they would tarnish our brand if they delivered damaged cakes,” says Sehgal. “That’s why we started to focus more on packaging. We used cake protectors (plastic support in cakes) so that the boxes could withstand even a 45 degree tilt. We worked with a chef to make sure we had edible adhesive to stick it to the base. The triangular cake protectors at the bottom prevent damage during packaging,” he adds.

Getting customers was another challenge. Social media, especially Instagram, was their main channel for showcasing modern designs that stood out from old-fashioned cakes and attracted a lot of attention. “In our first year, we didn’t have a budget for paid ads,” admits Sehgal. So they relied on organic reach and even brochures in newspapers, which then gave way to Google Ads as they scaled. As it expanded, Bakingo allocated 5-10% of its revenue to marketing. Their first big push came just before the pandemic, when they partnered with food delivery giants like Zomato and Swiggy, which charge 20-30% of gross sales as commission.

For Sehgal, timing is the key to operating and managing these platforms. “You need to determine your fixed cost. The calculation is simple: calculate the contribution margin of each order and multiply it by the number of orders necessary to subscribe to the fixed costs. This is the number of orders you need to have before getting started,” he explains.

Bakingo’s journey

• Rs.20-25 lakh was the initial investment from profits of a previous business.
• Rs.30 lakh was the turnover in the first year (2016-17).
• 5 to 10% of the annual turnover constitutes the company’s marketing budget.
• 4 members were part of the launch team.
• 37 cities are now served by 103 cloud kitchens.

With a bigger budget, Bakingo is experimenting with outdoor ads, OTT platforms and influencer marketing to expand its reach. The company aims to expand into Tier 2 or Tier 3 cities, open more retail stores and invest in R&D and product innovation.