The Ultimate Guide To Starting A Food Business (Part 3): Gain Experience At Record Speed


We have discussed about finding good location to set up your business and have researched a kick-ass menu for your restaurant. Next, you need an expert or mentor with experience to help you avoid the common mistakes.

Ego trip: a journey to nowhere. - Robert Half

Starting any new business, especially if you have no experience in the industry is unbelievably excruciatingly hard. It's difficult to open a shop and be successful straight off the bat without prior experiences. It's dangerous to lead with your ego/overconfidence and start one assuming that you will figure out as you go. Your ego might say that you know the best, but it’s always good to get someone with experience to help you.Unless you have unlimited capital, a family with deep pocket or a promising investor, your ego will let you bleed money on basic mistakes that can be avoided with knowledge of the industry. There are two ways to learn about the industry fast:

Free Method

Take a month or two and be the apprentice of a restauranteur or work for a restaurant. It’s better if you can work in a similar business, but it might be frowned upon if the owners end up knowing that you learned from them to compete with them.Expert Tip 1: I would highly suggest getting a job in the industry for 6 months. Doesn't really matter what you do, so long as you spend all your time learning about the food industry. I was a partner in a meal prep business that went from a very small company making a couple hundred of meals a week, to thousands. It's a whole lot of work, especially if you don't buy a turnkey restaurant. Restaurant work specifically is not something to do if you don't love it! Like everyone else said, it will consume your life!

Paid Method

If you don't want to work for someone, hire someone with at least 5 years of industry experience will help put the initial systems in place. Make sure you hire them on a short-term contract, and learn as much as you can from them. You can also learn by asking the right questions to potential candidates during an interview, such as:

  • What have changed in the industry in the last 5 year?
  • What are the common mistakes most restaurants are making? How to avoid those mistakes or reduce the risks?
  • What regulations that one must be aware of in the restaurant business?
  • How do you manage inventory and do you have any preferential suppliers? Why?

Asking a lot of why-s and how-s goes a long way to identifying a good candidate and in learning about the business. Expert Tip 2: If you've been making burgers for your family and friends, seems pretty unlikely that they're going to be seriously critical of your product. If you're really keen, start with a food truck! The overheads are much lower, you can learn the basics in a simple environment and you'll be able to figure if everyone really loves your product. Most good restaurants opening up in my town started out as food trucks. It's a great starter to get your feet wet.

10 Things To Consider From Industry Experts

If you have no time to do the process, we asked some restaurant owners that we know and here are the points that you should be aware of.

  1. Your rent should take up no more than 25 percent of your revenue, another 25 percent should go toward payroll, and 35 percent should go toward the product. The remaining 15 percent is what you take home. In other words, Make your rent in four to seven days to be profitable, a week to break even. If you haven’t hit the latter mark in a month, close.
  2. Always start with a good food offering, especially during lunch and dinner. It will make or break you!
  3. Make the big decision on how much are you willing to pay for rent from the get go. It will shape a lot of your other decisions in the quest to become profitable as quickly as possible. Food/restaurant business' are insanely hard, I've never seen a restaurant owner taking it easy. The hours are extremely long. Margins are slim and you have heaps of competition (not just other burger restaurants, all other restaurants in your local area). The initial investment is huge, full kitchen fit out, full restaurant fit out, fitting an extractor and another heavy kit in the kitchen. You'll need to have deep pockets too as at the beginning (unless you have a serious amount of influence) people won't come. You need to weather the storm until customers start coming. Of course, there are some seriously successful, wealthy restaurant owners but this is not an industry for the faint-hearted. So, be ready to fight your way to becoming a great business person.
  4. Do some local market testing before going forward (not friends or family). Have strangers drink it. Get some data on if they like it and get some data on what they would pay for it.
  5. Getting to a competitive price point is tough. It’s one of the ‘invisible’ barriers to entry in the food business. Price is too high and no one will come to your shop, price it too low and you will never be profitable!
  6. Have enough capital for two years to pay your rent and cash flow. This will allow you wiggle room just in case things aren't going as well while you try and figure out a better way to market.
  7. Don’t forget to adhere to health department rules. You can call them up to get the latest regulations or get it off their site. Make sure you get your finances right from day 1, instead of spending days cleaning it up closer to tax date.
  8. Expect the build out to take longer and cost more than you expect, as unforeseen things are bound to happen.
  9. Shop insurance is expensive, do research on this and pick the best for you before you start. Include it in the cost of business from the get go.
  10. Your business depends on good people, therefore it's crucial to have excellent hiring and training practices. Failure here means bad reviews at best and huge workers compensation claims at worst.

Now, if you have figured the 10 points above, in the next part we will get to the fun part: Managing your finances (with examples) and promoting your business. Are you an industry veteran or have extensive business experience in food business? Leave your comment below and we would love to get your insights!If you would like to source for restaurant supplies, please do check out Dropee!