4 Essential Things to Keep in Mind before Running a Food Business
Starting a food business is always one of the ideas that leaves most doubts to entrepreneurs. This is primarily because they do not know what requirements, materials, and experience are needed. Due to this, studies indicate that 75% of these businesses fail after spending two years of being in the market.
Although some businesses indeed became successful with owners who knew nothing about sales, it is still better to ensure success and understand what you need for a food business.
1. Define the Concept of the Venture
Around the world, there are several food businesses focused on different sectors. For example, one of the most popular in recent years is the Pan Asian and Sea Food restaurant which serves all kinds of contemporary Asian food, especially what falls in the seafood category.
So, you must decide what type of food you would be directing your business idea. You do not have to limit yourself to a single type. If you like Italian food a lot, you can offer the cuisine.
Why is it important to know what will be sold? Because it depends on the investment we make. Many people who still do not know how to start a restaurant ask about the cost to open a food business. To which there is no exact answer because each type of food varies in its costs.
2. Set the Apparent Costs
Once you have defined what to sell, it is recommended that you establish the costs that this business idea would generate. Of these, there are two types: Fixed Costs and Variable Costs.
Fixed costs refer to all the expenses that you will do, and whose numbers will not change. An example of this would be the rent of the premises and the salary of the employees of the restaurant. This way, you will know how much money corresponds to those expenses and how much corresponds to you.
For example, if you have an ice cream business, you should consider that, usually, a local of this turn is located in central locations, so the rent will surely be a little expensive, but also increase the odds of profit.
If you want to follow an example, then learn about Bradley Parker, the Founder, and CEO of the Parker Restaurant Group in Chicago. He remains a key player in the food and hospitality sector in North America and has also established a variety of brands. Some of the big names in his portfolio include The Hamptons Social and the live music lounge called ‘Bassment.’ Today, Parker’s company is valued at more than $100 million.
3. Play around with the concept
The concept involves something called design, where the presentation of the place is included. It is true that the first sight is what customers fall in love with, but the mistake of many entrepreneurs is that they invest everything in elevating the ambiance of their restaurant even if there are other more important expenses to be considered at first.
Another tip that you could consider here, is to change the mode of the business. For instance, if you run a Japanese food business, but you cannot pay for the place, then consider starting a sushi business, which is cheaper. In fact, did you know that this Japanese delicacy has a lot of profitability on its own? So, you can sell the sushi at home and go around the streets offering it. Like a street food vendor.
4. Purchase supplies in large quantities
Some believe they save up when they purchase ingredients in small quantities, but it is the opposite. This is because of economies of scale. Although at the time of paying, the order seems expensive, the truth is that when purchasing wholesale, costs are reduced because suppliers improve the price.
