Hospitality Guide
How To Start a Food Business
If you’re someone who enjoys cooking or baking, or even if you just have a passion for food, opening your own business within the food industry can be a rewarding career path. In this article, we discuss everything you need to know to start your own food business, including tips to find your niche and host a launch event.
What is a food business?
A food business is any business that prepares and sells food, such as restaurants, bakeries, fast food restaurants, cafes, food trucks and more. A business in the foodservice industry can range from a small in-home business to large national franchise restaurants and everything in between.
How to start a food business
Follow these steps to start your own food business:
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Choose your niche.
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Perform market research and analysis.
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Write a business plan.
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Obtain licenses and permits.
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Purchase your equipment and find a food supplier.
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Create a budget.
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Create your menu.
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Build your brand.
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Assemble your team.
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Choose and prepare your location.
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Market your food business.
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Host a launch event.
1. Choose your niche
The first thing you need to decide is what type of food business you want to open. You should consider what type of food products you want to sell and how you want to sell them. For example, if you want to focus on selling baked goods, you will likely want to consider a bakery as your food business.
You will then need to decide whether you want to have a small in-home bakery service or a local brick-and-mortar bakery. You might even decide to start as an in-home service and grow your business to a store-front business.
2. Perform market research and analysis
Once you know what type of food you want to sell and how you want to sell it, you will need to perform market research and analysis to determine what the competitive landscape for your business is. You should try to consider who your direct competitors will be, how well they are performing and how you can offer a better service, product or experience than they do.
3. Write a business plan
Creating a formal written business plan will help you organize your thoughts and plan the details of your business. A business plan is important because it serves as the guide your business will use to accomplish its goals. You will also need one if you need to find investors or get a business loan.
4. Obtain licenses and permits
The foodservice industry has specific rules and regulations you will need to comply with to run your business. It is important to research the licenses and permits your business will need to operate legally. You may have federal, state and local rules and regulations you need to follow, so be sure to look into what the requirements are for the type of food business you plan to open.
5. Purchase your equipment and find a food supplier
No matter what type of food business you are starting, you will need equipment to help you prepare and make the food. Equipment can include items such as cutting boards, tables and counters, bowls, pots and pans, baking dishes, mixers, blenders, plates, utensils, food storage equipment such as refrigerators and freezers and cooking equipment such as a stove, oven, toaster and microwave. You will also need to find a food supplier to provide you with all the ingredients you need.
If your food business is going to be an in-home business, you will likely be required to keep your equipment and ingredients for your business separate from your personal kitchen equipment and ingredients for regulatory purposes. You may also need to purchase food packaging materials if your business will sell food for take-out or delivery.
6. Create a budget
When creating a budget for a food business, you need to consider both your startup and continuing operational costs. It’s important to consider what costs are fixed and which ones may fluctuate and prepare your budget with flexibility for fluctuating costs.
A few things to consider when making your budget include equipment, licenses and permits, insurance, ingredients, building rent, labor costs, utilities and kitchen maintenance. Your budget will help you determine whether you have enough savings to start your business on your own or if you will need to secure additional funding, which could come from a source such as a business loan or investor.
7. Create your menu
After you have started to plan your budget, you will need to create a menu of food products that you will offer to your customers. As you create your menu, think about how much you will charge for each item. Your menu prices will need to be high enough to cover your costs and earn your business a profit, but reasonable enough to earn your customers’ business.
You don’t have to figure out your entire menu at this stage, but having a basic idea of the items you will offer and their prices will help you get started and then you can make adjustments as needed later on.
8. Build your brand
Your business’ branding is what will help you stand out from your competitors. If you are starting a restaurant, for example, your restaurant concept will have a major impact on your company’s brand.
A restaurant concept is made up of the food you serve, the ambiance of your restaurant and the service style. Your brand will also be made up of your company’s name, logo, color palette, vision and mission statement which identifies what your business is and what your goals are.
9. Assemble your team
Your staff will play an important role in the success of your food business. The amount of staff you will need to hire depends on the size of your business, how busy you expect the business to be and the type of foodservice your business is providing. Begin by thinking about the types of tasks you will need your staff to do to help you determine the types of positions you need to hire for. Common food service positions include prep cook, executive chef, sous chef, pastry chef, server, host, bartender, busser, dishwasher and management.
10. Choose and prepare your location
You will need to determine the location of your food business and prepare the location to provide service. If you are opening a brick-and-mortar restaurant you will need to find a space that has enough room for both your kitchen and dining areas.
If you are starting a takeout food business, you will need a space that has enough room for your kitchen, a service counter and possibly a small eat-in dining area. If you are starting an in-home food business, you will need to establish a space that will be used solely for your business.
When selecting a location for your food business, you should consider factors such as visibility and accessibility, local demographics, local labor costs and minimum wage and the local competition. Once you have chosen your location, begin preparing it for your business’ opening by setting up equipment, stocking the kitchen and preparing and decorating dining spaces and areas customers will see.
11. Market your food business
Many businesses in the foodservice industry rely on word-of-mouth marketing. You can encourage this type of marketing by creating a memorable and positive experience for your customers and asking them to refer their family and friends to your business. You can also use local advertising such as flyers or newspaper ads.
However, marketing has shifted away from traditional print advertising and toward the digital space. It is important to establish a web presence by creating a website and social media profiles for your business and then using these pages to market your business.
12. Host a launch event
There are several types of launch events you can choose from for a food business. If you are opening an in-home food business, you might consider hosting a launch party online. If you are opening a brick-and-mortar restaurant, you might want to consider hosting a soft opening, a grand opening or both.
A soft opening involves opening your business to a select number of people or for limited shifts before you open to the general public. This can help you get valuable feedback before you host a grand opening.
13. Analyze and make adjustments as needed
After you open your food business, you will need to regularly review how your business is performing and try to find areas where you can improve or expand your business. This could include things such as adding new menu items, changing prices, expanding your operating hours and more. Try to compare your business’ performance to the performance of your competitors to see which areas you need to target to improve.
How To Start a Food Business