You have a great business idea but aren’t sure where to start? Discover what you need to do and how to get started with our 8-step guide for launching a successful food business.
You may be a passionate entrepreneur who has an innovative restaurant idea, a talented baker looking to advance your skills, or someone who dreams of traveling with a Food Truck to offer your vibrant street foods to anyone, anywhere. It can be exciting to start a food business, but there are also many obstacles and challenges that you will need to overcome.
When Is The Best Time To Start A Food Business?
It turns out, now is a good time to make the leap. According to research, the food service industry will grow from $2.646.99 billion to $5.423.59 billion between 2023 and 2030 at a CAGR 10.79%.
The idea of opening your own F&B company may seem intimidating, especially with the bleak outlook for new businesses. According to research, up to 90% of all new restaurants fail. Restauranteurs and hospitality business owners are also concerned about the impact of rising labor costs, energy prices and inflation on market products. Even seasoned professionals will find it difficult to navigate the market with these rising overheads.
There is no perfect moment to begin a business. A business can fail even in the best of circumstances. Some of the most successful companies have come out of difficult circumstances and economic hardship. It’s logical, really. A business that can survive and thrive in difficult times shows resilience and the capability to overcome future challenges. Don’t wait until the perfect time. Don’t wait for the perfect moment.
We’ve put together an 8-step guide for beginners, complete with tips and tricks to get you started.
1. Create a solid business plan
Doing thorough research is the first step you should take before investing. Spend a few months (or weeks) learning more about the food service industry, your target customer, trends and competitors. Then, start writing your business plan to present to investors. Consider it an exploration of your 4Cs: consumer, channel, context, and customer.
You’ll need to:
- Define the target market: Who are you targeting with your new venture – empty nesters? Seniors? Baby boomers? Gen Xers or Gen Zers. After you have defined your target market, you should understand the products they purchase, the reasons they make purchases, from where they make their purchases, and what motivates them. You can then create a targeted, relevant offering.
- Define Your USP: Find out what makes you different from others. Look at your direct and indirect competitors to determine your competitive advantage. It doesn’t need to be revolutionary, but it must be relevant. If you are targeting young families then creating a kid-friendly restaurant with healthy children’s food could give you an edge over the competition.
- Define the style of your restaurant: Are you considering opening a full-service restaurant, a fast-casual restaurant, a quick-service restaurant, or if you’re thinking about opening s bakery? Choose the channel that best suits your personality and work schedule.
- Choose your menu/food type: Start early in the planning process to think about the food and menu you want to offer. Discover the newest menu trends (especially those that are relevant to your target market), and then tailor your offer accordingly. The hottest trends include vegan/vegetarian diets, allergy friendly & gluten free menu options and sourcing local produce.
- Define Your Brand: Your brand – your logo, your imagery, your menu design, your music, even the uniforms and clothing of your employees – defines what your business stands for. This sets the tone of your restaurant, and tells your customers what to expect. Consider carefully how you would like to present yourself, and what your brand identity should be.
Test your plan once you’ve created it. Ask your target audience for their opinions and feedback. It could be something as simple as asking a few people on the street for their opinions or as complex as a market research study.
2. Secure your financing
It’s now time to organize your finances. Not everyone with the desire to open a restaurant can afford to fund it themselves. In fact, most don’t.
There are many other ways to find funding.
- You can get a business loan
- Family and friends are the best source of support
- Find an outside investor or partner
- Angels and Venture Capitalists
- Use crowdfunding
- Get government aid
Remember that you will likely have to wait years before making your first profit. Money is also going to be scarce at first. Start small and plan to grow. Choose your partners carefully, as they will be with you for quite some time.
3. Choose your location
Location, location, and more location. It turns out that this is not always true. Location is important for many reasons. If you are not relying on foot traffic to drive sales, then you may not need to choose the most popular retail location.
You’ll want to take into consideration the following factors:
- Cost: Based on your projected sales and profits, how much can you spend on rent?
- Accessibility for potential customers: How do your customers get to your restaurant? By foot, car or public transport?
- Restrictive ordinances: Some neighborhoods have strict noise restrictions or restrictions on when your suppliers can bring your produce.
- Proximity of other businesses: other businesses and competitors can affect your traffic. Map out what is happening around you and how it may impact your business.
- Future plans: Consider what your neighborhood will look in 2, 5, and 10 years. Also, consider if any major projects are underway that may change the local landscape.
4. Plan the layout of your space
It’s time to design and layout your space once you’ve chosen a location.
This will vary depending on what type of restaurant you run, but most restaurants devote 45-60% of the space to dining, 35% to kitchen, and the rest to office and storage.
Consider the flow of traffic between your dining and kitchen areas. It’s also important to give your chefs enough space to prepare their food, including a place where they can plate, garnish and decorate it.
It is also a good time to consider what technologies will be needed in your food business. Whether it’s a POS system or kiosks, tablets or audiovisual elements that promote specific products as well as contribute to atmosphere, the technology must be integrated within the design.
Don’t compromise on your dining room. It’s the main stage, where the magic is made. Finding the right decor and ambiance to make your guests feel welcomed is crucial to success.
5. Choose your suppliers
You’ll work with many different vendors as a restaurateur – everything from furniture to bar equipment, kitchen appliances and, of course, food. Create a wish list and determine your budget for the short- and long-term. Then, start looking for partners. Remember that, while you do not want to compromise on quality, an overpriced supplier can reduce your margins. Negotiate hard.
Where do you begin? Ask for recommendations at other restaurateurs or wholesalers. You can also try local farmer’s market, F&B conventions and wholesale retailers.
Look for a supplier who is reliable and has a track record of delivering quality products. Be sure to ask about the food supplier’s delivery schedules, and their food safety management procedures. Buy local, as they offer better quality ingredients and are also more environmentally friendly.
6. You need to get your licenses and permits
Every country, county and city has different regulations. You should check with your local regulatory agency and seek legal advice to ensure that you comply with all local food and health regulations. If you intend to serve alcohol at your restaurant, an alcohol license is also important.
Be aware that some licensing can take several months, so start the process as early as possible.
7. Start hiring your employees
Think about the staff that you will need for your type of restaurant. This may include HR managers and purchasing experts, accounting staff, marketing and sales managers, chefs, sommeliers and waiters. It could also include bartenders and dishwashers. Hire enough staff to do each job. Plan for shifts and backups in the event of illness or vacation.
Candidates with sufficient experience, a proven track record of success, who can multitask and are efficient are the best candidates to look for. All your employees must be able to work under pressure and the staff who will interact with customers should possess exceptional social skills.
You can never be too cautious when hiring employees. So do your homework. Do background checks on the candidates, have several face-to-face interviews and contact their references.
8. Advertise your business
You’ll need to advertise your new restaurant in your community before it opens.
While word-of-mouth is still the most effective form of advertising, there are other ways to announce your new venture.
- Create a great site: make sure it is easy to navigate, includes your opening hours, menu, booking system, and how you handle special requests.
- Share relevant news on social media: Create accounts on Facebook and Twitter and share high-quality pictures of your restaurant.
- Use paid media to advertise your restaurant: You can use advertising platforms to reach thousands of people that are interested in food and who will match your target audience on social media, search engines and website ads. It’s important to use a professional agency or freelancer to ensure that you do not accidentally overspend your ad budget.
- Hold a soft-opening: This is not only an excellent practice run before opening day but also helps create buzz in your local community about your restaurant. Consider a small guest list and a soft-opening for friends and family, followed by partnering with local businesses.
- Give promotions to new customers: give a free dessert or drink for the first 50 or 100 guests. You’ll be remembered by your generosity and hospitality. Who doesn’t like free stuff?
We’ll leave you with a final tip to help you succeed: Work hard, never give up and be willing to break the mold. The bottom line is the ultimate measure of success, but it’s also important to track, review and measure performance across a variety of metrics in order to continually reassess your business model.
It is a difficult task to start a new business. You will likely face an uphill struggle, but nothing tastes better than success.
