How to Start a Food Business: What You Need to Know
Do you want to know how to start a food business? Like any other venture, a food business is not without its rewards and challenges.
The global pandemic has led to pent-up demand for visiting restaurants, bars, and other food establishments. Most people opt out of the restaurant industry because they feel that home cooking is more convenient than dining in public spaces. However, this may not be true, as revenue from these businesses is expected to rise by 15% in 2021.
One of the biggest hurdles is knowing where to start when starting a food business. We’ve created this checklist to help you find all the tools and resources needed for success.
1. Create a Business Plan
To start a food business, one must first write and complete their plan. The following points should be included in the restaurant or food business plan:
- Business entity type: Are you an LLC, general partnership, or sole proprietorship?
- Food business concept: Are you a quick-service restaurant, full-service restaurant, or food truck?
- Marketing, logo, and name: Create a brand that customers recognize.
- Target market: What kind of customers will be attracted to your business?
- Ideal location: Choose a place or area that will sustain your business.
- Budget: Allocate a budget for inventory, labor, rent, utilities, etc.
- Menu and price range: What dishes, beverages, or baked goods will you be offering? At what price will you be selling them to make a profit?
- Staffing plans: How many employees will you hire, and how will you spread them among management, front of the house, and back of house positions?
When it comes to the specifics of your business plan, they will depend on what type of food-related enterprise you are looking into.
2. Buy Your Equipment
The cost of a bakery, coffee shop, or restaurant equipment is going to be one of your most significant startup expenses. To have everything you need when opening the doors for business, you will likely have to buy (or rent) the following:
- Kitchen appliances such as ovens, stoves, microwaves, grills, and fryers
- Cold storage appliances such as walk-in freezers, refrigerators, and ice machines
- Work surfaces such as countertops, steam tables, cold food tables, and cutting boards
- Smallwares include sauce pots with lids, sauté and frying pans, and baking sheets.
- Kitchen utensils such as a good knife set, tongs, and ladles
- Silverware for the front of the house, tablecloths, napkins, and placemats;
- Barware and glassware;
- Furnishings such as tables, chairs, decor, and host stand;
- Make sure you can comply with capacity or distancing requirements;
- Curbside pickup and delivery supplies like bags and drink holders;
However, this will give you a good idea of what they are.
3. Assemble Your Team
Every food business has different labor and staffing considerations. For example, if you’re planning to start a restaurant on wheels (food truck), it is most likely that there are just 2 or 3 people running things.
In contrast, a full-service restaurant will need servers and bartenders over 18 who can serve alcohol. The kitchen staff also needs to cook food for guests and bussers to clean things up.
It’s not uncommon for people in the foodservice industry to move around frequently, so job-hopping isn’t always a bad sign. With that being said, make sure you are thorough with your interviews and get references from previous employers before making any final decisions.
You may need to hire different employees depending on the type of food business you’re starting.
- Cafe: Cashiers and baristas
- Bakery: Cashiers, bakers, baristas, and kitchen staff
- Food Truck: Cashiers and cooks
- Ice Cream Shop: Cashiers and ice cream scoopers
- Juice Bar: Cashiers
- Full-Service Restaurant: Managers, prep cooks, line cooks, hosts, waitstaff, bartenders, bussers, barbacks, dishwashers
4. Get Licenses and Permits
Being compliant with food safety regulations is essential, but it’s even more so in the restaurant industry. You’re dealing with products that people eat and consume.
To conduct business, here are some of the things you’ll need:
- Federal Employer Identification Number (EIN) for taxation purposes
- Business license from the city, state, or province
- Foodservice license from the town, state, or province
- Certificate of Occupancy (CO) deeming the restaurant safe for customers to occupy
- Tavern license if you want to sell only beer and wine
- Liquor license for establishments that serve hard liquor for cocktails
- Cabaret license for establishments that have a dance area for customers
Keep in mind that different restaurant concepts are subject to additional regulations. For example, food trucks need a more limited license because they’re on the go and not stationary like your typical burger joint or ice cream parlor. You may be under the oversight of local authorities, so make sure you know all applicable health codes.
5. Set Up a Point of Sale (POS) system
It is now necessary for a restaurant to have a POS that integrates with online ordering. It should be able to print tickets, manage both in-person and online orders, keep customer tabs open, split checks, and take payments anywhere.
When it comes to choosing a POS system, you’ll need to know what type of food business you are running. For example, if your restaurant is quick-service then the functionality and features will be different than one for a full-service establishment.
Final Thoughts on How to Start a Food Business
Your checklist on how to start a food business will depend on the concept, size, and menu. This list should give you an idea of what needs to happen in order for the business to succeed.