DISCLAIMER: This content is provided for informational purposes only and is not intended as legal, accounting, tax, HR, or other professional advice. You are responsible for your own compliance with laws and regulations. You should contact your attorney or another relevant advisor for advice specific to your circumstances. Starting a food business?
Whether sprinting through your early stages or taking one step at a time, starting a business is a marathon, not a race and you’ll want to be as prepared as possible before you take your first steps.
Here are five tips that can help you prepare to start your food business in the competitive market of food and beverage.
Sixty-second summary
Find what your unique selling proposition is and make sure you communicate this to your target audience.
Try to sell your products on a small scale before making any major investments. This provides primary research data and helps you determine your business's key strategies, such as pricing.
Try to identify and plan for potential shortfalls early on so you can assess whether you need to access financing.
Do your research, most food businesses require similar certifications, but some regulations may apply to specific industries.
Gain knowledge and advice from experts and other entrepreneurs by connecting with local leaders or people in your industry through meet-ups, or by joining a commissary kitchen.
As a new business, understanding what your unique selling proposition is will help you remain competitive on and off-line.
According to the Restaurants Canada Foodservice industry forecast 2021-2025:
“Take out / Delivery / Dine at home trends will continue. Post pandemic, successful operators will still have to be great at these to-go formats, and their digital presence and ordering tools for customers remain crucial.”
Although this works best with understanding your customers, knowing what it is you do well and communicating this effectively throughout your marketing strategy will help you build your audience and grow your customer base.
Your food is more than just fuel. Consider what value you provide that is most relevant to your customer.
In the case of Pastaggio, they specialised in artisanal pasta but expanded their inventory to include: ready-to-bake focaccia, bolognese, small-batch preserves, and a 15-layer lasagna.
Their products are not only delicious but by utilizing the flexibility of a commissary kitchen to test new ideas, they are able to provide a premium experience for their customers.
Knowing your market can save you time, money, and resources.
Merci Boulangerie is a bakery at our Powell Street location and rivals many Parisian-inspired bakeries around town with their hand-made laminations.
Chef / Owner Natalie Cumberbirch wanted to bring the experience of fresh croissants and pastries from her time spent abroad in Europe to Vancouver. Selling B2C (business-to-consumer) through farmers’ markets allowed her to find and validate who her customers were and what products actually sold. As time went on, the limitations of selling solely through farmers’ markets became clear, so she introduced a line of frozen products for wholesale.
This new revenue stream stayed true to her initial vision but also allowed for scalability and growth into new markets.
Your products and brand may change over time. Therefore, it’s best to understand what your product is and its saleability on a smaller scale before building a checklist for opening a restaurant. In BC, there are certain rules and regulations you’ll need to meet before producing and selling your food, such as a using a commercial kitchen space
For more information on what a commissary kitchen is and who uses them - read it here.
It’s a common misconception that 90% of restaurants fail in their first year. However, according to the National Restaurant Association, most restaurants close within three years of opening because they don’t have enough capital to stay afloat.
To keep your business in good financial standing, here are a few tips:
A cash flow forecast can be a helpful planning tool for any business owner. It helps you anticipate future cash flow problems and can give you an understanding of how much cash your business needs.
Don’t forget to include all your revenue and expenses. Expenses will be broken down into fixed costs, such as rent, insurance, and loan payments, and variable costs, which are things like payroll and food.
Starting a profitable food business is an ongoing process, if you’re curious how one catering company grew its business to be more profitable during the pandemic - click the link here.
If you choose to operate out of a commissary, here is a list of resources regarding licenses and permits you will need, in addition to your business license.
Liability Insurance
According to the Canadian insurance company, The Co-operators: “With liability insurance, you’re protected in the event your business is found legally responsible for injuries caused to another person, or damage to their property.”
Food Safe Certification
Food safe is a provincial certification which regulates the standards of food sanitation, handling and work safety. By law, you are legally required to have one member on your team with this certification present while producing your food.
Food Safe & Sanitation Plan
This is a document that puts your food safety knowledge into action, by detailing your procedures for receiving food, storing, chilling, preparation, etc. You can find a list of templates and guides here.
Food Permits
Depending on the type of food business you want to start, your business will need either a food service permit or a non-permitted facility application form.
Both permits essentially allow you to sell food to the public. However food service permits allow the majority of food businesses to operate, and non-permitted facility applications are typically for food stores, manufacturers, and food trucks.
Industry standards are constantly evolving. Be sure to monitor updates and changes as there are plenty of regulations that may be required depending on your region and business model.
There is no one path to starting a business.
Joining a community is difficult, but you can greatly benefit from building a network of entrepreneurs, or a mentor to support you. Try not to limit yourself to just other food entrepreneurs; entrepreneurship covers almost every industry, so try to surround yourself with advisors, accountants, lawyers, health inspectors, and brokers.
With a Coho commissary kitchen, our onboarding process is guided by our experienced commissary managers, to help you get ready to start your dream food business! Join a community by applying for our commissary kitchens where you’ll work side-by-side with over 150 food entrepreneurs and create connections throughout the hospitality industry.
Sources:
5 Key Considerations for Starting a Food Business
Food Safety & Security - Province of British Columbia
5 Cash Flow Management Tips for Restaurant Businesses.
Why Do Restaurants Fail? Part III: An Analysis of Macro and Micro Factors