For some entrepreneurs, the only kind of business that’ll do is a food business. What type of food business should you start? Because deciding what kind of food business to start is a huge decision, it is best to consider all the possibilities and to scrutinize several options.

How to start a food business?

Millions of entrepreneurs have started food businesses before you. Some failed, and others succeeded with their companies. If you want to succeed with your business, you can’t avoid the realities of starting a food business. But we a little planning; you are more likely to take the necessary steps toward building your food business.

What kind of food business to start?

Don’t settle for starting any food business unless you feel that it is the right business for you. You have to have a passion for the business you start. But passion isn’t enough to start a food business. There has to be market demand. Without market demand, your business will be without customers and your business will fail.

Deciding on the type of food business to open will depend on your unique needs and interests.

To help, I have compiled a simple guide to help you decide what kind of food business to start based on your skills, situation, and personal goals.

Ask yourself these questions first:

What is my lifestyle preference?

If you like long vacations, short workdays, and a low-stress career, the food business might not be the best option for you. Before you start a food business, you must be brutally honest with yourself about your lifestyle preferences.

No matter what kind of food business you decide to start, you have to live your life around it. A ten-hour day is considered a short day in the food business. Starting at the crack of dawn and finishing hours after your last employee has left for the day is expected. Are you going to be happy with that kind of schedule? I don’t want to talk you out of the food business; just be real about it.

What relevant experience do I have?

Enthusiasm can only get you so far in business. If you have food business experience, you are a step closer to starting a food business. Have you worked in a restaurant? Even if you were only washing dishes, it is useful. It’s even better if you managed a restaurant in the past.

Have you had a job where you had to manage people? If you worked in roles where you managed inventory can be extremely helpful. Although restaurant experience is not a requirement to start a food business, it is helpful.

Am I passionate about the food business?

If you don’t love it, success is less likely. If you want to start a restaurant, you must love the idea of running a restaurant. If you’re going to operate your own food truck, you have to jump out of bed and dance your way to your next location. This is important. Nobody will love your business more than you. If you are going half steam ahead, the people working for you will be even less motivated to succeed.

If you are a tea enthusiast, a tea place might be a great option. If donuts are your thing, you could revolutionize the donut business. But above all, you must have a passion for the food business you start.

There is one more critical thing for you to think about. Don’t start a business based on a trend. Trends come and go, but if you don’t love it, don’t start it.

What do you have that other food businesses don’t offer?

If you open just another Mexican food restaurant, you won’t be able to differentiate your business. Have you studied the food business? Do you see unmet needs? Can you serve those unmet needs? The most successful food entrepreneurs can find opportunities to serve and solve inefficiencies.

How much money do you have to start a food business?

Some businesses take less capital than others, but all of them take money.

What does it cost to start a food business?

The cost to start a food business depends on the type of business you want to start. You could spend millions on starting a restaurant or almost nothing to start a personal chef business. Of course, some food businesses require more licenses, permits, and certificates than others. All of these have associated costs.

Here are a few examples of food business startup costs:

  • Personal chef business – Perhaps the least expensive food business to start. Personal chefs cook in private homes with a complete kitchen already in place. You don’t need to make huge investments in this type of business. If you have your knives and some specialized equipment, you should be good to know.
  • Food truck – Expect to spend at least $50,000 to start a food truck business. Depending on the truck, you could spend two or three times the minimum amount.
  • Catering business – Catering is a less expensive food business to start. You could start with as little as $10,000.
  • Restaurant – Even small restaurants are expensive to start. You could easily spend $200,000 to open a small restaurant. And the sky is the limit on the capital requirements of high-end restaurants.

What is the cheapest food business to start?

You have several options to start an inexpensive food business. It’s no secret that to open a restaurant can cost a lot of money, but there are other cheap food businesses you can start.

Here are the cheapest food businesses to start:

  • Farmer’s market food vendor – If you have a grill and a folding table, you are in business. Well, not really, but almost. To sell food at a farmers market requires very little startup capital.
  • Video chef – There are many successful chefs on Youtube and other video sharing platforms. If you love to cook and don’t mind the work it takes to shoot, edit, and publish video, this might be a great option. You could start with your phone camera, so this is a super cheap food business to start.
  • Food blogger – If video is not your thing, you could become a food blogger. Even though you don’t have to make videos – but it would help if you did – you still need to write and take terrific photos.
  • Food tour guide – If you live in a city with a decent travel industry, you could offer food tours. You could drum up business on social media in no time.

What is the best food business to start with small capital?

The best food business to start with small capital depends on several things. First, you have to look at the options for low-cost food business. Then, you should decide if you are passionate about any of them. The key here is to start a business you really love. If you really want to start a food truck business, but you don’t have the capital, you could start with a farmer’s market food stand. Once you have built momentum and saved money, you could evolve your farmer’s market food stand into a food truck business.

What is the cheapest and most profitable food business to start?

If you want to start the cheapest food business, you should consider becoming a personal chef. You could easily make $50 per hour as a private chef with almost zero startup expenses. Your client pays for the food you cook. You use your client’s home kitchen to cook the food. You basically invest your time and expertise and invest virtually no money to start this business.

Which food business is most profitable?

Unfortunately, many food businesses operate with slim profit margins. Therefore, before you start a food business, you have to make sure that the business you choose has a relatively low cost of goods sold (COGS). If you can find a business with 10% to 15% COGS, you could have a highly profitable food business.

Coffee and tea businesses are relatively high margin business. Unfortunately, paying the rent on your location will make your business less profitable. The most profitable food business are those without fixed expenses. So, any food business your start where you don’t have to pay rent or employees will be more profitable.

The most profitable food business are:

  • Food blogger
  • Food video creator
  • Food travel tour guide
  • Bubble tea shop
  • Farmer’s market food vendor

Why is the food business profitable?

Profit is the positive monetary gain your food business makes after you have paid all of your expenses. Profit is not the same as total sales. To have a profitable food business, you have to understand profit margins.

Before you start a food business, calculate your profit margins. Yes, there are two types of profit margins:

  • Gross profit – Gross profit is what you have left after deducting the cost of goods sold.
  • Net profit – Net profit is what you have left after deducting all of the expenses associated with operating your food business.

Gross revenue – total expenses = profit

How do I invest in a food business?

If you want to invest instead of starting one, you could become an angel investor. There are thousands of businesses seeking investors at any given time. Investing in a food business is inherently risky, and you could lose your investment.

How do I start a small food business?

If you are serious about starting a food business, begin with a business plan. Your business plan doesn’t have to be a lengthy document, but it should include the following:

  • Describe your business. If it is a restaurant, describe your concept. What type of food will you serve? Describe the overall feel and vibe of the restaurant.
    What are the costs involved in starting your business?
  • Who is your customer? It’s not enough to say; we will serve the neighborhood. You have to drill down to the smallest details. Where does your customer live? What do they do for a living? How old are they? What is their income?
  • How much will you charge? What profit margin do you expect? Is your margin lower or higher than industry averages?
  • What is your marketing strategy?

How do I start a street food business?

Check with your local city administration to learn about permits, licenses, and certificates required to start a street food business? No matter how great street food ideas you have, if you can’t do it legally, your food business is a non-starter.

Which food business is the most popular?

Restaurants are the most popular food businesses in the world.

What is the best selling street food?

In the United States, the best selling street foods are:

  • Hot dogs
  • Hamburgers
  • Tacos
  • Burritos
  • Sandwiches
  • Tamales

What are the most profitable street food business ideas?

Selling tamales is one of the most profitable street food business idea. Hot dogs and corn on the cob are also highly profitable street foods.

How to start a food business from home?

If you want to start a home-based food business, you might need to get a permit from your regional health department. You mustn’t make any assumptions about permits, licenses, and certificates. Always check with your local city and state administration about the requirements to operate a food business out of your home.

Here are some important things to know before you start a food business from home:

  • Form a business entity for your business. Many entrepreneurs only think of forming a business entity too late in the game. The right business entity could offer liability protection and tax advantages. Do your homework to find the ideal business entity for your company.
  • Learn the rules and regulations for starting a home-based food business. You should be aware of both local and state requirements for running a food business out of your home.
  • Talk to home-based food business entrepreneurs. Home-based food business owners can be a great resource for you. Ask them about the business challenges they face. Find out what mistakes they have made, so you can avoid making the same business mistakes.
  • Test the market for your food business idea. You could bake the tastiest cookies, but if you can’t sell them, you have no business. You could take your product to a local farmers market to test if people will buy it. You could also partner with local retailers to see if they would be interested in carrying your products.
  • Understand that you don’t know everything. Sometimes the best strategy is to hire a professional. Talking with a business attorney or a tax professional can be money well spent in the long run. Your time is better spent working in your business than trying to learn everything about starting and running a business.
  • Create written agreements and contracts. A handshake is meaningful, but it may not stand up in court. The best way to protect your business is to put everything in writing.
  • Maintain a professional image. Even if your food business is home-based, and even if it is a brand new business, a professional image goes a long way. Hire a professional to help you design a website. Don’t design your own logo; hire a professional. Design all of your product packagings to communicate a professional image to the market.
  • Have a marketing plan. Don’t expect the phone to ring without hustling for business. You have to be the face of the business. Don’t hide behind the product. Go out there and market your product. Nobody has more credibility than you to sell your products.
  • Price your products carefully. Many businesses price their products incorrectly. They either sell for too much money or not enough. You need to have competitive pricing, but you also need to generate enough profit to grow and operate your home-based food business.
  • Keep your eyes on everything. Especially when you start your food business, you can only rely on yourself for everything. You have to manage production, work on marketing, understand your financials, hire people, etc.

What does it cost to start a food business?

The beauty of starting a food business is that you can start one with no money. You could become a personal chef or a food blogger with virtually no startup capital. Starting a restaurant or creating your own food product could require hundreds of thousands of dollars in startup capital. Before you start a food business, consider how much startup capital you have.

Starting a food business checklist:

  • Write up a business plan.
  • Create a budget and stick to it.
  • Come up with a great business name.
  • Form a business entity. It is best to consult a business attorney and an accountant before you decide on the business entity.
  • Lease space for your location.
  • Create your branding. Have a logo designed for your business.
  • Have a go-to-market strategy. How are you going to market your business?
  • Hire employees.