Here at Design Clarity, we know and work with specialists from various fields. Faisal Haque, friend and associate of Design Clarity indulged us by giving us his ‘5 steps to set-up a food business’. For any start-up, his advice is golden. The following text is written by Faisal and explains how he started up his business.
Most people dream of starting a food business as all of us love food and are passionate about our favourite dishes. But how do you take a food concept from your kitchen table to a full business operation?
I started to Wrap it up! in May 2006, with a single store opposite Liverpool Street station. It was tough, I spent more money than I should have as well as having to get through one of the worst recessions of this era too.
However, the business expanded and has 12 stores today and is in the process of opening a further 5 too, and so a real success story.
It’s a challenge to summarise the tips for starting a food business, but those of you willing to follow your passion, here are my top 5 to help you on the way:
Be known for One thing
Every successful food business is known for one product or branding theme. For example, McDonald’s and their beef burger, Nando’s and their selection of Piri Piri chicken, Wrap it up! and wraps. Here the theme is based solely on the food product and the customer knows what they are getting.
For other successful businesses, it may be based on a concept. So Pret sells freshly prepared products of all types, Ethos sells ‘meat free’ products, Pure sells healthy products. Here a theme is in place that distinguishes them in the marketplace.
Consumers find it hard to remember all the food choices around them and have short memories. So make it as simple as possible for them.
Its all About the Product
The product is the most important thing – this is what the customers will be coming back for and so make sure you have a top-notch product. Without a repeat customer base, then sales will dwindle over time.
Also, the product type has to be able to cover a wide range of customer groups. Pizza’s, burgers, wraps are universal products appealing to men, women, old and young and so make a good product choice for a business. A pizza business will always do well!
On the other hand, selling a very niche product will limit the customer group and the sales. In general, chicken and beef are what British customers go for with vegetarian making a big wave at the moment, and fish pretty niche (except for Fish and Chips) due to British tastes.
Location, location, location
The importance of location cannot be underestimated and must fit in with the product type.
For example – Wrap it up! targets lunchtime office workers. Hence, being close to a large office complex is great for business. Customers don’t like to walk too far and so being as close to their office entrance is always good for business. It’s all about the convenience here.
On the other hand, if you have an evening restaurant business then you’re more of a destination point and so convenience is less important. It’s important to have a match between your product price and those in the local area – can they afford it? With more up and coming areas today in London, like East Dulwich and Peckham Rye it is possible to pay a good rent low rent in an area full of young professionals with disposable income.
Branding
Have you ever been to a restaurant or any kind of retail outlet which looks so nice and well branded, that you know that the foods going to taste great, even before you’ve tasted it? That’s great branding for you and something Design Clarity know very well!
Half of the battle of a food business is enticing customers into your store. With great branding, then people will walk past and be tempted to come in and check it out – so the brand acts as the best marketing tool for your business.
Never skimp on branding – at Wrap it up! we spent an arm and a leg on having the brand and logo created by a branding agency and it was money well spent. The logo and brand have not been changed from the beginning and still going strong after 10 years!
Cashflow Model
Once you have the first four points nailed down, then the cash flow model of the business becomes the most crucial part of the longevity of the business.
If you’re using a central kitchen model then you typically need to get to 3 stores before you’ll start to make any significant profits. This is because all the profits of the first store go towards covering the central kitchen. The central kitchen cost doesn’t increase by much on store 2 and store 3, and so eventually with each new store, you are able to generate more profit to cover the overheads.
With a restaurant, you’ll be running both the kitchen and front of house in one location, and so you’ll have to keep an eye on all the costs. Most restaurant operations start with a higher cost base – higher staff, ingredients etc until efficiencies are created.
The best thing though about a restaurant or food business is if you get the model right, then its just opening more stores and so expansion becomes much easier the bigger you get. Plus, as long as people get hungry, there will always be a demand for food!
Good luck!
