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Do you like cooking for others? Or, are you interested in starting a restaurant without the hassle of hosting sit-down dinners? If so, creating a food takeaway business may be an excellent option for you!
This article will explain the key commercial and legal matters you should consider before starting your own food takeaway business.
Business Plan
Many businesses will benefit from a well-thought-out business plan. In their simplest form, a solid business plan will outline your business model, including how you will:
- finance your business;
- operate it; and
- grow it.
Indeed, there are specific things unique to a food takeaway business that you may want to consider. For instance, it would be helpful to consider the kind of cuisine that will you serve. Further, you may also consider whether your takeaway business will be predominantly vegetarian or vegan. In addition, you must consider the location of your shop. You may decide to operate out of your house as a takeaway business. Alternatively, you could rent a kitchen from a commercial landlord.
Another thing that may be helpful to consider is how your will customers order from you. For example, you could offer:
- online ordering options;
- phone orders; or
- can guests walk up to your premises and order in person?
Moreover, you will also need to think about:
- delivery services;
- how you intend to market your business;
- to what extent you will need to develop an online ordering system; and
- which suppliers you use.
Financial Considerations
To execute your business plan, you will need adequate access to money. Many food delivery businesses begin with owners who save their personal money and invest it into the business.
You may also borrow money from a bank or your network of family and friends. If you are raising money from family and friends, you may want to give away some of the equity in your business. In addition, it is vital to understand the longer-term dilutionary effect this may have.
Regardless of how you raise your finances, you need to ensure you understand the best investment options for that money. To do so, you need to determine your expenses and then price your food accordingly to make an adequate profit.
Startup costs
As part of your expenses, you must identify those necessary to get your business up and running. Some typical upfront costs include:
- how much it will cost to rent premises (if you are renting);
- what sorts of equipment you will need (for example, gas ranges, fryers, storage hardware, counter equipment, serving equipment, and any office or accounting equipment);
- licensing and certification fees;
- fees for legal or consulting services;
- websites and marketing fees;
- recruitment and training fees;
- the cost of insurance policies;
- waste disposal;
- point-of-sale (POS) systems;
- phone, internet, and the cost of other utilities (like heating and gas); and
- the cost of your startup inventory including meat, veggies, pantry items, and condiments.
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What Business Structure Will You Adopt?
Your business structure is the legal framework your business trades through.
The four most common business structures are:
- the sole-trader;
- an unincorporated partnership;
- a limited company; and
- a limited liability partnership (LLP).
There are several advantages and disadvantages to each business structure. However, as a takeaway owner and operator, you should be especially aware of the implications of being a sole trader compared to trading through an incorporated company. This is important to your business as it limits your liability.
The main benefit of an incorporated company is that you tend to benefit from the legal principle of limited liability, which means that the assets and liabilities of your business are separate from your personal ones.
The downside to trading through incorporated structures is that they require more administration and management. The more money you bring in and the larger your business, the more your liabilities grow, which increasingly justifies the expense and admin of an incorporated business.
Know Your Tax Liability
The amount you will pay in tax will depend on what business structure you trade through, in addition to your income and expenses. Moreover, you will want to check if the Value Added Tax (VAT) is payable, considering that your customers will not be eating food on the premises.
Insurance
If your takeaway business is open to the public, you should obtain a public liability policy suitable for occupiers. Even if your customers come in to order food and then leave, it is always a good idea to prepare for the worst. Furthermore, if you have any employees, the law requires you to obtain employers’ liability insurance.
Finally, it is a good idea to obtain an insurance policy that covers your equipment in the event they face damage by:
- fire;
- flood; or
- vandalism.
Regulations, Licenses, and Certifications
If you serve food, many important regulations exist to protect consumers. If you fail to abide by these regulations, you may be criminally and civilly liable for damages. In addition, your local authority will likely enforce most of the laws for sanitation and food service.
Additionally, depending on your equipment, you may need to obtain specific safety certificates, such as a gas certificate. Usually, the local authority regulates certifications as well.
Key Takeaways
You should ensure that you have a well-thought-out business plan before opening your takeaway business to the public. Further, you will also want to consider how you will pay for your business. For instance, will you raise money from outside sources or invest your personal savings? Other critical things to consider are the business structure you will use and which insurance policies you should obtain. Moreover, you will want to check with your local council to ensure you comply with their licensing laws regarding the sale of food.
If you need help with your startup business, our experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Visit our membership page.
Frequently Asked Questions
No law says you cannot sell food to the public from your own home. However, you might run into problems if you rent from a landlord or if there are certain restrictive covenants in your freehold or leasehold agreement that ban operating a commercial kitchen.
While the law may not obligate you to get insurance, it is always a good idea to have a suitable policy. In some cases, it may be a requirement to obtain insurance, such as if you employ others.
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