Process for opening a bakery in Luxembourg
Have you been thinking of starting a bakery, starting a pastry shop or maybe starting a cake shop in Luxembourg? No doubt you have many questions about the process. You may want to know if you need special permits, the qualifications or requirements the manager of the establishment must meet or how the company registration process works. To answer all your questions, we will detail the process step by step below:
Conduct a market study
Before starting the legal process of incorporation, it is essential to carefully prepare the business project. This involves carrying out multiple previous steps and one of the first, if not the first, must be to ensure that the project of opening a bakery is viable and sustainable.
One of the fundamental elements to be able to start the analysis and planning is a market study, which allows for the collection of a large amount of data on different aspects:
- 👩💼 The competition: a market study allows you to identify who the local competitors are, what their strengths and weaknesses are, the prices they offer, their value proposition and the differentiation strategies they use. This will subsequently help to position the bakery with a unique offering that stands out in the market.
- 👥 The clientele: a market study analyzes the profile of potential customers in terms of age, consumption habits, purchasing power, preferences, etc., in order to design products and services that adapt to their needs and expectations.
- 📊 Market trends: the study evaluates current demands, such as artisan breads, gluten-free products, vegan options or catering to identify growth opportunities and thus be able to align with changing market expectations.
- 📍 Optimal location: a market study allows identifying the best locations based on population density, pedestrian traffic, accessibility and proximity to competitors or strategic points such as offices or schools.
- 🙋 Potential demand: a study allows us to estimate the volume of products that can be sold according to the size of the market and the purchasing frequency of consumers.
Drawing up a business plan
Once a market study has been carried out, it is necessary to create a solid business plan. This should include the information from the market study and incorporate additional elements related to the economic and financial aspects of the project. The main elements that should be included are the following:
- Executive summary: a description of the business idea together with the mission, vision, and main objectives.
- Market analysis: the previously conducted market study must be included and the decisions made based on it must be added.
- Description of the business: the type of bakery, the products offered, and the differentiating value proposition must be detailed.
- Marketing and sales plan: pricing, promotion, distribution channels, and customer loyalty strategies.
- Financial plan: initial investment, operating costs, sales projections, break-even analysis, and possible sources of financing.
- Operational plan: location, design of the premises, necessary equipment, production and hygiene processes, and distribution logistics.
- Personnel management: employee requirements, organizational structure, and required training.
- Legal aspects: information on the authorizations and regulatory compliance required and the plan for obtaining them.
This document is essential as it serves as a roadmap to guide the establishment and growth of the company and to make informed decisions. It is also a key tool for attracting investors, obtaining financing, assessing the viability of the business and anticipating challenges and opportunities.
Company domiciliation
Once the viability of the project has been proven and a solid business plan is in place, it is necessary to get things moving and find a suitable location. During the planning phase, some guidelines regarding the location will surely have already been defined. Now is the time to go deeper and find a suitable place for the business.
It is important to take into account multiple criteria during the search, such as the visibility of the premises, how easy it is for customers to access, the proximity to other businesses that could generate traffic, the size of the premises, the need for refurbishment, etc.
Choosing the legal structure
In order to start a bakery in Luxembourg, it is necessary to choose the legal structure that the company will have. The choice is particularly important and should not be taken lightly, as the legal structure affects aspects such as liability, initial costs and the governance structure. For a bakery, some of the most recommended options are the SARL (Limited Liability Company), the SARL-S (Simplified Limited Liability Company) and in some cases, the Public Limited Company (SA), although other options may also be valid and even more suitable depending on the project in mind.
- SARL: is ideal for small and medium-sized enterprises as it provides a flexible and administratively manageable structure with a minimum capital of 12,000 euros and limited liability of the partners to the capital contributed.
- SARL-S: this is a simplified variant of the SARL designed for micro-enterprises and may be suitable if you are thinking of a small business and want to minimize costs as it allows you to start with a capital of as little as 1 euro.
- SA: if, on the other hand, you are planning to have a fairly large business or are looking to expand the bakery on a large scale or attract investors, the SA may be a suitable option, as this type of structure allows for the issuing of shares. However, this option requires a minimum capital of 30,000 euros and more complex management.
Choosing a name for the company and checking its availability
Before setting up the company, it is necessary to choose a name for the company and check that it is available. This is done by submitting an electronic request for a certificate of availability of name to the Luxembourg Business Registers (LBR).
Opening a bank account and depositing the share capital
Another of the steps prior to the incorporation of the company is the opening of a bank account in the name of the company in formation and the deposit of the share capital. In doing so, the bank will issue a certificate of blocking of funds that must be presented to the notary as proof. For this step, the final statutes of the company are not required, but it is necessary to at least present a draft of them.
Drafting and signing of the Articles of Association
In order to register the company it is essential to first draw up its articles of association, which must contain essential information such as the name of the company, its registered office, its corporate purpose, its duration and its share capital, among other details. Most of the elements to be included should have been prepared in advance during the creation of the business plan. Once the statutes have been drawn up, they must be signed privately or before a notary depending on the type of legal form chosen.
Registration in the Trade and Companies Register (RCS)
Once the articles of association have been signed, it is necessary to register the company in the Luxembourg Trade and Companies Register (RCS). This registration is usually carried out by the same notary, however, as of November 12, 2024, it is necessary that as part of the process, any person associated with the company to be registered (partner, director, manager, authorised representative, auditor, etc.) provide a Luxembourg national identification number (LNIN).
Publication in the RESA
Once registered in the RCS, the incorporation of the company must be published in the Recueil Electronique des Sociétés et Associations (RESA), which is the official gazette of Luxembourg where all acts related to companies are published. This publication is a necessary step to make the public aware of the company's existence and to guarantee transparency regarding its constitution, its address, its share capital and its administration. In Luxembourg, the notary is generally responsible for coordinating this publication.
Application for a business permit
In Luxembourg, all individuals or companies intending to carry out commercial, industrial or craft activities must apply for a business permit. Bakeries clearly fall within this category, so the future director of the company must apply for this permit. To do so, it is necessary to meet several requirements that aim to ensure that the person carrying out the activity has professional integrity and possesses the necessary qualifications, experience and resources to carry out the activity. To learn more about this process, check our article on registering a business in Luxembourg.
Social Security affiliation
If the company is going to hire employees, it must register with the National Health Fund (CNS) to comply with social security and pension contribution obligations.
Registration for VAT purposes
If the bakery expects to invoice more than 50,000 euros per year, it must register with the VAT administration to obtain a VAT number.
Preparations prior to opening
Although a good number of formalities and procedures have already been completed, it is still necessary to carry out a few more before opening, some of the most relevant are the following:
- 🥣 Equipping the bakery: it is necessary to acquire the necessary equipment such as ovens, dough mixers, whisks, refrigerated display cases, bakery utensils and customer service furniture. Here it is important to ensure that the equipment complies with Luxembourg food safety and hygiene regulations.
- ✅ Comply with food safety regulations: it is necessary to obtain approval from the Commissariat à la Sécurité Alimentaire to ensure that the facilities and processes comply with legal standards.
- 👩🍳 Hire the necessary staff: bakers, pastry chefs, cashiers or customer service staff must also be recruited according to the needs of the business.
- 💻 Obtain the necessary software for operations: it is necessary to implement business management programs and obtain the necessary software to record sales, manage inventories, schedule staff shifts and perform financial monitoring.
- 🤝 Establish contracts with suppliers: it is necessary to confirm agreements with suppliers of raw materials to maintain a constant flow of inputs.
- 📢 Start advertising: it is necessary to implement the marketing strategy devised during the initial planning process.
- 🛡️ Obtain compulsory insurance: it is important to take out insurance such as civil liability and occupational risk insurance as well as optional insurance to protect the equipment and the premises.
- 🔎 Carry out an operational test: finally, a trial run with the team and staff is necessary to ensure that the workflow is efficient and that everything is ready to start operating.
