The food business can be one of the most lucrative and challenging ventures that any entrepreneur may pursue. Since antiquity, food has been a staple product for sale. Food has created countless fortunes in the process. However, can the food business still make money?
Most people assume that to become a restaurant owner, you must inherit it from somebody else. That can’t be further from the truth. All businesses have started from scratch at some point.
But then again, can you still make a lot of money in this line of work? The short answer is that the food business offers opportunities for all aspiring entrepreneurs to make money. However, the food business does have its risks. It will take a lot of work, time, and commitment if you want to succeed.
How Do You Get Started in The Food Business?
The biggest obstacles that people encounter when trying to start a food service business are high startup costs. Restaurants, coffee shops, pizzerias, bakeries; none of these businesses are inexpensive to start. Nevertheless, if it was always your dream to own a restaurant, don’t let the costliness of launching one scare you off.
My parents were owners of a restaurant in the town that I grew up. My family is of Greek descent, so they naturally gravitated towards the diner business.
They did not, though, have the necessary funds to open a restaurant themselves. My parents had some help from my grandfather, who owned a small coffee shop in Manhattan through the 1970s and 80s. My grandfather made a decent amount of money with his coffee shop, which he opened through saving money working as a dishwasher.
You Don’t Need A Lot of Money If You Start Small
Too many entrepreneurs get intimidated by the high costs and expenses. But where they go wrong is that they aim too high in the beginning. When you are first starting, you should opt for a small business with a low startup cost. Most restaurant chains today began as either small dine-in stores, food trucks, and even food carts.
There’s no shame in opening a lemonade stand either. You can make a good profit by selling the ice-cold drink.
Start with a Food Stand
It’s a misconception that you need to take out a massive loan just to get started in the food business. You can buy a hot dog stand for as little as $2,000. Hot dog stands are great since they have a low startup cost and can be relatively simple to set up.
Of course, you don’t have to limit yourself to only selling hot dogs. There are plenty of different foods that you can sell, it all just depends on your specialty.
For example, The Halal Guys started as a food truck and eventually became so successful that the owners began expanding. Now, The Halal Guys is one of the biggest restaurant chains in the United States.
That is how food businesses grow. It’s also the way most restaurant chains began. For example, Shake Shack famously opened as a hot dog stand in New York City, eventually evolving into the burger joint we know it as today.
Save Your Money and Start More Businesses
I remember overhearing my family chat about how other businesses were doing in the area. Most of these businesses were Greek-owned restaurants that had originated from nothing. Greek immigrants came to America initially without any formal education at all. Most of them didn’t speak English, so they worked as dishwashers in diners and coffee shops.
Other Greeks that had some money from back home opened small food carts and stores.
Eventually, a few of these Greeks would save up enough money to buy out the businesses that they worked for. It was hard work, no doubt about that. But, this strategy made plenty of Greeks wealthy.
These people didn’t speak the regional language, nor did they ever have any real education, yet they still achieved success. In all honesty, if they could do it under those circumstances, then so can you.
How Much Money Can You Actually Make?
The amount of money you could make with food will depend on the type of business. Some restaurants make thousands of dollars a year, while others are on the verge of bankruptcy. First, you need to decide what kind of business fits your skills and interests the most.
There are also two other routes you can take in the food business:
- Franchisee- $75,000-$125,000
- Food Chain- $500,000-$5,000,000,000+
It is possible to maximize your profits in the food industry. I’ve seen restaurants net around $200,000 a year. However, I have also seen restaurants make only enough to pay their expenses. To avoid the second outcome, you must prepare yourself as a professional. Become someone who is an expert in the food industry.
The Steps to Making Money as a Food Entrepreneur
To become a successful food entrepreneur, you must decide which type of business will best suit you. As a small business owner, managing multiple stores by yourself can be daunting. For this reason, it’s better to open smaller stores and sell them off until you’ve reached your goal as an entrepreneur.
If you decide to become a franchisee, supervising multiple stores will have less effort, but it can be more expensive. The franchise will deduct some of your profit. Choosing which type of business is right for you is imperative in becoming a successful food entrepreneur.
As a Small Business Owner
Food carts can average up to sixty thousand dollars annually, but if it’s in a bad location with a lackluster menu, it’s likely to fail. By doing the opposite, your food cart will have a chance to be profitable. If it can average $60,000 a year, you can pay the startup costs and all other expenses. Obviously, there is no guarantee that you will make this amount of money. Yet, it is possible, and if you can’t earn that, it just means it will take longer for you to save.
The operational costs of running a hot dog cart can be as low as $900 a month, leaving you with plenty of room to save money. Now let’s say you eventually decide to move on and buy a coffee kiosk.
A coffee kiosk can cost as high as $50,000 to open. That may sound like a lot of cash, but remember, you’ve been saving money through your food stand. It most likely would take you a few years to save up and buy a coffee kiosk. Not to mention, with the money you make from the kiosk, your finances ought to be in better shape than they were before.
Your credit score will improve, and you may even qualify for a business loan from your local bank. With the help you’d receive from a loan, combined with any money you have already saved up; opening your dream store will finally be in reach. That is how small business owners slowly grow their empires. By starting small, you can profit, save money, and improve your finances. Giving you more leverage as a businessperson.
With a Food Chain
This path can be a little different than being a small business owner. As a franchisee, you act as the supervisor for part of the company you work for. You have the right to sell the franchise’s products under their name.
They will claim a proportion of your profits, but the good news is that you can open many of these stores and have them manage themselves. Furthermore, don’t worry about any marketing or pricing. The company handles all of that.
Franchises are typically expensive to open. The high cost might push some entrepreneurs elsewhere, but if you can obtain one somehow, you’ll have the opportunity to earn great pay.
Similarly, as a founder or CEO of a large chain, you have the potential to make millions. Instead of buying random businesses and selling them, you will stick to one idea and grow it from there.
It’s probably the most difficult outcome to achieve as an entrepreneur. Restaurants and food carts that make a ton of money are the ones that attempt to expand as food chains.
For instance, some might go to Wall Street for funding, while others remain private. Whatever the outcome is, if you can successfully become a founder of a restaurant food chain, you are bound to make a fortune.
How to Successfully Run a Food Joint
Starting a business can be scary but getting involved in the food business is even scarier. The food business requires a lot of time, money, and dedication to making it work. Aspiring entrepreneurs fear the horror stories of failed restaurant owners, warning them of the challenges to come. This business does indeed require long hours and time away from family.
However, my question is, which career doesn’t? At least which career pays a high salary? I’ve seen restaurant owners run 2-3 stores at a time and probably together earned over $400,000 a year.
What kind of job will pay you that salary and won’t require some sacrifice? Surgeons must work up to 60 hours a week and be on call 24/7. In fact, lawyers at big law firms are forced to work up to 80 hours a week, while Wall Street bankers are known to work up to 100 hours.
All jobs that pay good money will require time, work, and stress. If you are interested in the food business, don’t let the long hours keep you from chasing your dreams.
Focus on the Customer Not Your Competitors
Firstly, one of the biggest mistakes I see restaurant owners making is that they focus too much on what their competitors are doing rather than the needs of their customers. This is one of Jeff Bezos’s biggest pieces of advice for business owners and it is one of the reasons Amazon became so successful. Pay attention to what your customers tell you and find ways to make them happy.
For example, customers love it when you listen to their complaints. Ensure that you keep up with whatever they are asking of you. Social media is a great tool for keeping a record of what your customers are saying. Stay connected with them and find ways to give the best experience at your establishment.
Pick a Great Location
Furthermore, picking a great location is one of the most crucial things in this industry. Find somewhere that’s busy, vibrant, and full of potential customers. Choose a place that’s easy to find and that you know will be ripe with people no matter what time of day.
Become an Expert Marketer or Hire One
In the food business, the marketing team is vital. There have been countless campaigns of successful marketers that have gained incredible traction for their products. Just look at the recent Popeye’s chicken sandwich. Their marketing team had turned an ordinary sandwich into something consumers were dying to sink their teeth into.
Hire and Train Great Employees
By far, the biggest challenge of running a full-service restaurant today is the high turnover rate. Restaurants are having a labor shortage problem that seems to be unique to the foodservice business.
Indeed, the kitchen staff is almost certainly the hardest to find a keep. Followed by service staff, which includes both servers and bussers. To find high-quality employees, you must incentivize people to work for you instead of your competitors.
Post job ads, pay decent salaries, train your employees well, and find good management to organize your team.
Succeeding in the food business takes time. Yet, the hardest part is in the beginning when you might not be making any profit at all. High labor and food costs will eat up at your sales, which may well leave you indifferent.
Thus, the entrepreneurs that stick with their endeavors are the ones that succeed. It’s normal not to see any profit in the beginning. It took my family over ten years to start seeing real profit at their restaurant
The food business can offer you a fun way to earn a profit from your work. If you like cooking or nutrition, this gives you a perfect chance to monetize your passions.
However, even though the business is hard, others have made it with less money and resources than you have. To succeed in this business, you must be passionate, hard-working, and competitive. There is plenty of money for you to make in the food business. You simply must be ready to work for it.