I have used this bag (and previously, produce bags) at Bakeries, when buying bread rolls for our lunches when we are travelling, and have always had a positive reaction from staff (it saves their overhead costs too).
To make the bag I used unbleached calico, and fabric remnants from other projects for the appliqued letters (a good way to use up small scraps). My bag is 13" (33 cms) wide and 18" (46 cms) long, and I took these dimensions from a plastic bag containing 6 large bread rolls, that I had previously purchased at a Bakery.
Cutting the fabric
Cut two pieces of bag fabric, each 13" (33 cms) x 18" (46 cms)
Completing the applique
Find some alphabet letters to use. I used some from a pattern I already had, which was "I know my ABCs" by Kids Quilts, but I found this alphabet on an internet search:
Trace the letters in reverse onto vliesofix (a double sided glue backed with paper).
Choose the fabric you would like to use for each letter and iron the vliesofix onto the fabric, with the paper side next to the iron sole plate.
Cut out the letter with sharp scissors and use a pin to help with peeling the paper from the fabric, leaving the layer of glue attached to the fabric.
Measure up 7" (18 cm) from the bottom of the front bag piece and place the letters evenly there (I used a ruler to assist with lining their bases up) and then iron the letters down (it helps to do the placing and measuring on the ironing board, so you don't have to move the piece and risk dislodging the letters; this is the voice of experience!).
Blanket stitch around each letter. I used ordinary sewing thread in a matching colour, but you could use embroidery thread and/ or black thread.
A tutorial on doing blanket stitch can be found here (scroll down to the instructions for Sewing in from the edge):
Sewing the bag
Sew down both sides of the bag and across the bottom, with right sides together, and then neaten with an over locker or zig-zag stitch.
Turn the bag right side out and measure across the width of the bag. Then cut two pieces of fabric 2" (5 cms) wide and the length of the width of the bag plus 1" (2.5 cms) for the cord casing. It is nice to cut this from contrasting fabric that blends with the letters. Iron in the ends of each piece 1/2" (1.25 cms) and then iron the whole piece in half along its length.
Matching the beginnings and ends with the seams on the bag, sew the casing around the top of the bag, and over lock it to neaten. Using a tapestry needle, darn in the end of the over lock thread. Then iron the casing upwards.
Completing the bag
Cut two lengths of cord long enough to go right around the top of the bag, with added length for tying a knot, and thread each of these through from opposite sides of the bag (going right around the bag each time). A large safety pin is useful to use as a bodkin, and don't forget to tie the cord ends into knots after they have been threaded through.
Remember: Yesterday I was clever, so I wanted to change the world. Today I'm wise, so I'm changing myself. Rumi