Every business model has its own set of challenges and rewards, and the fast food business is no exception. Many owner-operators who have chosen fast food enterprises have no idea what they are signing up for until they get started, and they will tell you there is no shortage of excitement. But the most exciting part about starting this type of business isn’t the food; it’s the earning potential!
In a recent article published by the Small Business Administration (SBA), “7 Tips for Starting a Fast Food Business; It’s not Just Fries, Subs and Pizza Anymore!” the author starts out by examining the definition of “fast food” in America.
Ever since restaurants like Panera Bread, Chipotle and Saladworks came on the scene, entrepreneurs have begun including “Quick Serve Restaurants” or QSRs, in the fast food category. In many ways, a dual concept has emerged that blends the fast pace of food that can be served quickly with the desire for some healthier options and ambience. Even some full-service restaurants have gotten into the “fast food” business by offering curbside carryout service.
Before we explore some tips for starting a fast food business, it’s important to understand how this perception-shift has changed the landscape for entrepreneurs. While restaurant ownership of any kind is a hugely popular dream, it’s important to do your due diligence before entering the marketplace. It also helps to have a realistic picture of what the restaurant business is really like.
Here are some tips for starting, operating and growing a fast food or take-out business successfully:
1 – Don’t scrimp on research: If someone tells you that a certain neighborhood is ripe for more fast-food restaurants, don’t take their word for it; do your own research. Talk to people in the industry, attend local Chamber of Commerce events and pick the brains of respected business owners. Make it your mission to find out what works, what doesn’t and why. If you know about restaurants that have failed, find out what they did wrong.
Knowing the potential pitfalls before you go into business will help you avoid costly mistakes. Use this “research phase” to define your target market and build a strong business case for how you will go after it. Whether it’s specializing in local cuisine or opening a popular franchise, choose the business model that meets your objectives.
Learn about the competition and dig into local demographic information to see if your idea will work in a specific market. Look into potential locations and consider which ones will attract the best audience for your business. It’s easy to research this on Business.gov in the “Market Research Guide,” which allows free access to consumer data and demographics.
2 – Start small: Even if you dream about a day when your empire will have locations throughout the region – or the world – it’s important to start with realistic expectations. Before you can grow the business you must first understand all the basic fundamentals that apply to fast food businesses.
Get a taste for the fast food business by running a small sandwich shop or a food concession stand. This will give you a feel for the pace of the food service business before you take on too much overhead. Fast food franchises are another way for newly minted entrepreneurs to get started in the industry with minimal risk.
3 – Make a business plan: You may already be familiar with the formalized document known as a “business plan,” and how important it is to get this step right. By tweaking your plan in the beginning you can ensure it matches the strengths that the market presents with the concept of the business. It can also help you deal with unforeseen challenges as they emerge.
More than just a working document for your own planning purposes, a business plan is essential in communicating with potential investors, partners and vendors. If you want the rest of the world to embrace your business model as much as you do, having a clear and concise plan will give you instant creditability.
4 – Seek out financing or investors: Not every business owner needs investors to get started, but there are a range of different financing options that should be considered. Very small microloans might be the best option for smaller fast food outlets, but many entrepreneurs prefer a more comprehensive business loan like the 504 or SBA 7(a) loan programs.
5 – Take care of some regulatory steps: No matter what type of business you run, it’s important to take care of certain legal and regulatory steps early on. Items such as registering the business, obtaining permits and licenses and deciding on a business structure will keep you from unnecessary delays in opening your doors to the public.
Running a restaurant within the limits of the law can be a lot more complicated than you think. From food safety laws to labor laws and inspections, legal and regulatory requirements can have a huge impact on the success of a fast food operation.
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