How to Start a Food Business

For many food lovers, the ultimate dream is to start and run their own food businesses. However, just like other ventures, starting and operating a successful food business is not straightforward. New restaurateurs need a lot of operational skills, which can make the idea of pursuing their goal seem overwhelming.

More discouraging is the bleak outlook for start-ups, with research showing that 80% of new eateries fail. However, the silver lining is that 20% don’t. If you’re a budding entrepreneur with a fresh business idea but aren’t sure where to start, you’re in the right place. In this article, we will discuss in detail the steps you need to follow in order to start a food business. Read on to find out more.

Research and refine your business idea

First and foremost, before you even think of any investment, it’s crucial to do thorough research. Spend some weeks to gain a deeper understanding of how the broader food service industry works. You should seek to learn about customer behaviors, the latest trends, and how to deal with competition.

Normally, in the food industry, there are numerous options you can consider regarding the type of business to start. However, remember that the sector is highly regulated, as businesses have to pass many tests before they can be approved. Of course, food that is meant for human consumption must be clean and safe to prevent food-borne disease outbreaks.

Find your specialty

Once you’ve done your in-depth research, it will be time to choose your niche. This is where you look around and try to find a gap in the market that needs to be filled. By doing this, you have a good chance of starting a food business that will be more successful than one that has heavy competition from opening day. Some profitable ideas include a food truck, a brick-and-mortar restaurant in an up-and-coming neighborhood, or a catering business with a specialization in certain events.

Looking for space in the market isn’t the only way to find your niche. Maybe you have perfected a special type of food, like Mediterranean-style seafood, or vegan treats! Why not put your special skills to use? Just because nobody is operating that particular business doesn’t mean there are no customers to bring you a profit. What you need is willpower, determination, and spirit, and with those, you’ll be unstoppable.

Once you’ve chosen your specialty, you can then draft a detailed business plan to guide you. Here, you will comprehensively put your thoughts and aspirations on paper. A business plan will also come in handy when you want to assess the performance and efficiency of your business later on. What’s more, it will help you when you’re seeking funding for your food business.

For more tips, you can read our in-depth guide on how to write a business plan here.

Get the necessary licensing

Before opening a food business, you must have some very important certifications and licenses. One example is the food hygiene certificate, which is mandatory for every person who will prepare and handle food. Regionally, these may be called food handlers certificates, or ServSafe Cards. Apart from that, you must also get a liquor license if you’ll be serving alcohol.

Different places have different laws pertaining to food licensing. This means you’ll need to inquire with your local authorities, so you know what’s expected of you. If you’ll be operating a terrace, you’ll need to obtain a license for this specific feature. The same goes for playing live music. Remember, always ensure that your business complies with all laws.

Location, location, location

When it comes to the crucial question of where to locate your food business, it’s advisable to choose a central location that is easily accessible. It will be hard to attract diners when you are in a difficult spot to reach. Also, if you are close to heavy foot traffic, you will see much higher numbers of clientele.

Of course, you will need to balance this with the fact that these locations tend to be very expensive to rent. Another option is to choose an area that is seeing lots of development. These areas are usually cheaper in rent and overhead costs, but still attract lots of people.

Establish your web presence

A website is one of the most important aspects of a business. You may not be selling food online, but having a strong online presence is still absolutely critical. Almost all potential customers will want to know what you’re offering before they can decide to book a table. They will also need to know about opening hours, menus, and more. Without a website, this becomes difficult.

Creating a website is not a hard task. In fact, you can choose to do it yourself by using online tools on sites such as Squarespace and Wix. These platforms provide an easy way to craft websites that not only look great, but which are also easy to navigate. There are many hosting providers available to new businesses. In particular, we recommend BlueHost as it offers a convenient WordPress installation tool, and up to 60% off hosting fees.

To attract and generate traffic to your website, it would be great to include a blog. More traffic to your platform means more customers and more sales, which will consequently lead to higher returns on investment.

Market your food business

Marketing is one of the essential components when operating a food business. It helps to sell your company by letting people know what you are offering, when you are serving it, and what sets you apart. It gives you a chance to explain to your potential customers why they should choose you instead of other competitors on the market.

Marketing also lets you inform your customers about special offers or new services that might appeal to them. There are a few time-tested methods to advertise your food business effectively. They include:

Social media

Using social media is one of the simplest and most effective ways to market your food business. It is also the least expensive, since registering an account is mostly free of charge. Through a social media page, you can encourage people to follow your business, making it a great way to share information. The more you engage with other local businesses, the more visible you’ll be. It’s also a fun way to create and strengthen brand identity, which can help draw in and retain customers.

Instagram is a wonderful way for people to share recommendations of eateries. In fact, many ‘foodie influencers’ take professional-style photos, and people often try new cafés or restaurants after seeing posts on Instagram. Another excellent site is Yelp, where people visit to share advice and read reviews on the best food businesses to start. Facebook is where many people start when researching restaurants, as their local pages almost all have hours and locations posted there, along with daily menus. Harness the power of these platforms to engage with potential customers, and have them follow you to increase their emotional investment.

Print materials

Using print media is another effective way of marketing your food business. This includes placing advertisements in newspapers, coupons, brochures, newsletters, and more.

Digital marketing

Another way of communicating to potential customers is through digital marketing. This is one of the most effective forms of marketing, and it offers many options for almost all budgets. Digital marketing includes advertising on electronic media such as television, radio, as well as on popular websites.

Alternatively, you can choose to use pay-per-click adverts or other affiliate programs on social media websites. With such options, your advert will remain on the site until it’s clicked on several times, or when a certain limit is reached.

For more details, you’d definitely want to read our ultimate business marketing guide.

Set and track your goals

Every start-up should have goal markers, and a food business is no exception. However, these might differ slightly from those of other businesses. Although sales and profits should be carefully tracked for all companies, a food handling venture comes with its unique costs.

One example is food waste. Tracking the prices of food items and reducing extra expenses should be one of the primary goals of your business. After all, food wastage can really eat into the overhead of food businesses, and owners need to get creative to keep this at bay.

You should also keep track of the key performance indicators (KPIs) in the daily running of your food business. These indicators will help you to monitor and assess how your business is performing. They include metrics such as cost of goods sold, cash flow, customer retention and customer feedback.

Remember, if the performance isn’t satisfactory, there’s always room to improve. You just need to maintain healthy cash flow, gratefully accept feedback, and constantly seek opportunities that will allow you to grow.

Planning your finances

Running a food business means paying a huge amount of upfront expenses. Before you even start buying food or planning a menu, you need to think about decor, space, kitchen equipment, paying for certifications, and the list goes on. You’re going to need a big budget. Thus, it is important to ensure that you are adequately prepared in terms of finances. If you haven’t quite got all the costs covered, consider looking for outside funding.

There are many ways to get funding. You can apply for a bank loan, seek help from friends and family, or use a crowdfunding site like GoFundMe. And when you manage to get sufficient funding, it’s advisable to keep the cash in a dedicated business account. This way, you’ll be able to keep track of all your income and expenses when it comes to auditing.

Have an entrepreneurial mindset

In the day-to-day running of your food business, you will face various challenges. However, that doesn’t mean that you should throw in the towel. The road to business success is not smooth and to make it, you must develop an entrepreneurial mindset.

Having such a mindset means that you should strive to continually learn, address challenges and remain focused on your objectives. Keep in mind that customers’ interests and preferences are always changing, which means you must adapt to the trends. This may include doing away with old things, and in other instances, adding new things.

What else should be considered when starting a food business?

Legalities

As we’ve previously mentioned, having the right licenses is one of the legal requirements for a food business. Filing taxes is another legal obligation that all businesses have to comply with.

Apart from that, you’ll need to find a name for your business. When creating a name, search for a corresponding domain online to be sure that it hasn’t been taken by somebody else. And for some inspiration in generating unique name ideas, you can always rely on our Business Name Generator to do the work for you.

Bookkeeping and accounting

Bookkeeping is another important aspect of operating a food business. In order to assess performance, you must keep track of cash flow, income, and expenditure. To make the whole process easier, you can use software like Xero and Quickbooks.

Alternatively, you can seek the services of professionals in the field, such as accountants and auditors. You can choose to employ these professionals either on a permanent or temporary basis.

Recruiting employees

When looking for employees, you can advertise for the positions on websites such as LinkedIn. Ensure you’re well-versed in the laws that govern the hiring of employees. Pay your staff based on their skills and expertise. After all, you would definitely want a motivated team that will work towards meeting the objectives you’ve set.

Conclusion

There’s a vast array of food businesses that you can start. If you’ve been looking to venture into this industry, the aforementioned steps will set you off on the right foot. Remember, running a successful business isn’t easy as competition is stiff and challenges are many. But with the right mindset, good planning, and the necessary resources, you have what it takes to be successful. So, identify that business idea and prepare yourself to feed the masses. As a budding entrepreneur, there is nothing you cannot do.