Setting up a food-service business:
5 points to keep in mind when founding your business
Sometimes we mull over ideas for months in secret, waiting for them to mature. Is now the time to open your own bar, café or restaurant? We go through the pros and cons in our heads over and over again – in the office during the day, out jogging in the woods or in bed at night before we go to sleep. And it's always the same questions – can this really work? What if nobody comes? How far will the money go?
To cut a long story short: no one has the answers. Not reliably, anyway. And certainly not before we try it. So let's follow the wisdom of German poet Johann Wolfgang von Goethe (1749–1832) instead. On his journey through Italy he came to the conclusion that thoughts are not what make us – actions are. So go for it! Our checklist can help entrepreneurs in food service with issues such as where to base the business, how to draw up a business plan and what to do about hygiene regulations.
A thought experiment on founding a business
Whether new to the industry or highly experienced, anyone looking at opening a restaurant, bar or café should be ready to get down to the nitty-gritty of the following points to get a clear stance on them. After all, just like in every other industry, you need a solid foundation in order to build a successful business.
1. Location, location, location
Location is one of the most important factors in starting a successful business.’ This is partly because it is intrinsically linked to a number of other factors, such as financial planning, business concept and legal issues. Finding the right location for your food-service business largely comes down to one question: who am I aiming this at? Your restaurant, bar or café must be easy to get to for this target group. Walk-ins are also important, though, so think of criteria such as public transport connections, sufficient parking spaces, whether you are in a pedestrian zone. This is all crucial. ’
Thoroughly analysing the location and corresponding target group in advance is therefore of great importance. You can obtain reliable information from the local department for urban development or property management companies that carry out surveys on footfall, for example. It may also help to ask companies that manage advertising at the location, as they are interested in footfall, too.
2. A clear concept provides structure
As we mentioned, the location is the foundation for developing a concept for your business. You need to consider the social environment where you want to open your restaurant. See what companies are already located in the neighbourhood, who they are aimed at and who works there. These are your first potential customers when you look to target your offering and who you can use as a reference when looking for trends that will work well. You should also keep an eye on your direct competitors and define in your concept what it is that sets you apart from them. All of these considerations will help you to ascertain early on whether your initial idea really has the potential for success. And, moving forward, this kind of concept is the perfect foundation for your business plan.
3. You are definitely going to need a business plan
In essence, a business plan just expands on the concept, going into more detail on the business management side of things. This makes it indispensable when handling anything to do with funding or finance – that might be discussing a loan with your bank, sorting out your taxes with the IRS or applying for a start-up grant. There is more than one way to draw up a business plan and several public services and business consultants can offer help, advice and even templates.
We also have further information on what factors to consider when planning and monitoring your finances from the start and later, when you're up and running. You can find this in our article, ‘Financial health check for food-service businesses.’
4. Take advantage of financial support for start-ups
You might be surprised by how often people fully self-fund their own start-ups. You don't necessarily have to, though, so check with the public offices in your area to see whether you are eligible for any financial support, such as a low-interest loan to complement your bank loan or perhaps even funding you do not have to pay back.
5. The legal bits: what hygiene and other standards do you legally need to meet?
You should be aware from the start: to open a food-service business you will need several licences in advance – and then you have to make sure you meet a whole host of legal requirements. You should attend courses on food safety standards and plan to familiarise yourself with all the relevant authorities.
Hygiene must always be the absolute top priority where food and drink are sold. Of course, this means proper training for all staff and business owners. It also means making hygiene considerations when purchasing furnishings, surfaces and especially kitchen equipment and appliances. Legal standards exist for all of these. When selecting your kitchen appliances, say, you should use manufacturers who make products which are precisely suited to your requirements.