Starting a restaurant business? 5 expert tips you should read first
Be it a takeaway or a restaurant business, Euro Foods founder Shelim Hussain MBE has advice to help get your food start-up off the ground…
The barriers to entry in the restaurant and takeaway business are minimal. It’s easy to start a food business, but not so easy nowadays to keep it going.
When I started out at 17 years old I had £20 in my pocket. Now you need around £50,000. That isn’t a large outlay, in terms of a start-up, but remember you dneed a o have to pay it back!
You can get the very best advice but it’s only by running a business that you will learn what works for you. You need to continually look at ways to improve and increase profits. And listen to suggestions, wherever they come from.
For example, one business idea I had came from listening to chefs who complained about cooking samosas. To make a samosa you have to firstly make a chapatti, then fill it with meat or vegetables, and then fry it. All of which takes about half an hour and you can only sell each one for £1.50.
I decided to mass produce samosas so they could be supplied to restaurants and takeaways frozen. It meant chefs could concentrate on more profitable meals and solved a common problem for the industry.
From my experience, I would suggest there are five main things to consider when starting a takeaway or restaurant business:
1. Identify a gap in the market
When I began 25 years ago as a restaurant and takeaway owner I had to go to five or six different suppliers to get different meats and services – from laundry to samosas. Providing a one stop shop made us different. If you’re setting up a “me too” business make sure there’s something about it that is different.
It may be worth considering seeing if you can get a Start Up Loan (external partner site, link opens in a new tab) to help you with financing, and mentoring to start this business idea. You'll also need to think about registering your business, either as a sole trader or as a company - if a company, then Smarta Formations (external partner site, link opens in a new tab) are an organisation that can help you set up.
If you have a new idea, you have to work out how long it will be before the competition copies it. In the food business I would say this is generally around six months. Or you can decide to go under the radar with a soft launch.
2. Be realistic about salary
Have a plan in place for how you are going to live without an income for the first 12 months. This is one of the hard facts you may have to face.
Check your income/expenditure/outgoings etc. If you do decide to pay yourself a salary then look at how much your business can afford and be realistic. You may have to put investment in the business above your own personal needs.
3. Good suppliers are vital
Selling is easy. You can sell anything provided the food or drink you’re selling is good and is set at a good price. But remember you have to have someone who can supply that product to you. You can’t sell something if you don’t have it.
This is why cashflow and planning is so important at the start. You have to be sure you have enough cash to pay your suppliers – stop paying them and you will find yourself without anything to sell!
4. Check out your margins as well as your costs
It doesn’t matter how much gross profit you make, what matters is if your costs outweigh it! You need to keep control of your costs at all times. Don’t become a busy fool running around for so low a margin that it isn’t worth it.
If you think you can win customers by keeping your margins low then what happens when you want to put them up? This is really tricky. You might have won the business in the first place but the customer could go elsewhere if they think you have become too expensive.
5. Look after your customers
If you have the right product, the right suppliers and the right price your customer should be happy but don’t ever take this for granted. Customer service is vital in the food industry. Don’t take your eye off the ball.
Have a system in place which allows you to monitor the service you provide. That way you will spot any lapse before the customer does (which is the last thing you want).
Your service has to be consistent too. It’s no good providing an average service, improving it one week and then bringing it back down to average again. The customer will only remember that the service has dipped and not that you improved on the original offer.