Manchester-based Martins Foods will invest £1.5m in new equipment after buying cake firm Mellors from administration.
Martins, which has a turnover of £10.4m and a chain of 28 shops, bought Mellors in April, saving 60 jobs, and has now secured funding from NatWest to boost capacity.
New proving equipment and line upgrades are planned at the former Mellors site in Southport, which makes Chelsea buns, Belgian buns, cinnamon buns and fruit toast for supermarkets and foodservice suppliers.
An additional cake line will be installed at the central 50,000sq ft Newton Heath bakery, which supplies its shops with over 200 different products.
Martins also has a 10,000sq ft facility in Llandudno, making Eccles cakes, and a 30,000sq ft site in Radcliffe, supplying products such as brownies and scones to ISBs and coffee shops.
The Radcliffe bakery has recently been improved, with a new roof and enlarged weighing and mixing areas. The company also plans to double the capacity of its tart lines at the site and install new cooling equipment.
Neil Martin, Martins MD, said the company had focused on supplying coffee shops with frozen cakes and pastries in recent years, with the Mellors deal enlarging its product range.