How to Start a Food Business

Before setting up your food business, it is a good idea to conduct some market research. This will help you assess your competition and your potential customers, giving you a better idea of the market you are about to enter. 

You might do this by looking at competitors or customer preferences online, getting in contact with similar companies, visiting rival businesses’ premises or simply surveying customers.

The questions you need to keep in mind are:

1. Is there a demand for my food business?
2. Who is my target market?

Once you complete this research, it is likely time to consider what type of food business you want to be:  

• Café or restaurant: Whether it’s a Michelin-starred restaurant or a greasy spoon café, these businesses share many of the same responsibilities and considerations. Owners will have to find premises, hire staff, kit out their kitchens and decorate their dining spaces. These businesses can be a big challenge to start but offer the chance to build a space with its own identity that can become an integral part of the local community, as well as hugely rewarding for you as the owner.
• Street food: A street food business will let you take your kitchen to wherever you think hungry customers will be. These vendors are often run by just one or two people and can be hyper-specialised – doing one thing but prioritising doing it extremely well. You will still need certain licences and to buy or rent a food truck, temporary premises or a pitch at a local event, but this will likely require less start-up funding than a café or restaurant.  
• Food production: If customer-facing operations are not your thing, you might consider food production. You can run this kind of business from a commercial kitchen or from the comfort of your own home and decide to sell at different outlets, be they physical or online.
• Catering: If you want to make food for large events, this might be the business for you. Challenges can include organising food transportation, combining large-scale with good quality and finding the right premises for food preparation.

Creating a business plan and budget will help give you a better idea of exactly how much money you need, as well as help you to work out if your ideas can realistically be turned into a business. A business plan will normally also be required if you apply for a start-up loan or more generic business loan.

For a detailed guide, read our article on how to write a business plan.

You will also need to put together a budget for your food business. Here are some costs you might need to consider:

• Premises: Unless you are making and selling food from your home, you will need to buy or rent premises. This could be a food truck, a market stall, a commercial kitchen or a brick-and-mortar space for your café or restaurant. 
• Equipment and furniture: Think of all the equipment you will need to make the food and drink you want to sell. This might range from a large oven to pots and pans or potato peelers. You also need to consider equipment your customers will use, like plates and cutlery. If you’re starting a café or restaurant, you will probably need to buy some tables and chairs too.
• Food and supplies: Work out how much you will need to spend on ingredients, cleaning supplies, napkins and other supplies you will need to purchase regularly. Remember that buying in bulk can save money, but buying too much could lead to surplus and spoilage.
• Bills: If you want to keep the lights on and the food cooking, you will need to pay your electricity, water and gas suppliers, as well as any other monthly bills. Make sure you do not fail to account for these crucial expenses. 
• Qualifications: There are no mandatory qualifications for people hoping to start a food business, but the Food Standards Agency recommends new business owners obtain a food hygiene qualification. Contact your local authority for advice about courses that will suit your needs.

For a detailed guide, explore our five-step guide to creating a small business budget.

One of the first official steps you will take when starting up is choosing a business structure and then registering your business. You should take your time and research which business structure will best suit your needs.

While a small food business owner who runs a food truck or café might be more comfortable as a sole trader or partnership, larger businesses like restaurants may be more suited to operating as limited companies. Our handy guide to choosing a company structure and registering your business will give you everything you need to make this important decision. 

» MORE: Should I register as a sole trader or limited company?

Depending on the type of business you are running, you will need to acquire certain licences. You should always check with your local authority about what licences are required in your area. Here are some of the common legal requirements and licences UK food businesses might need to consider:

Register with local authorities

All businesses that sell, cook, store, handle, prepare or distribute food need to register with their local authority. You need to do this at least 28 days before you commence trading. Fortunately, doing so is free and local authorities cannot refuse registration requests. This applies to basically all food businesses, so you must ensure you take this step.

Food safety and hygiene inspections

After registering with local authorities, food hygiene inspections can happen at any time and you will likely not receive advance notice. These visits will assess the safety and hygiene of your preparation areas and procedures. 

Failing these inspections can result in you receiving a notice that may ban you from using certain equipment or processes. These bans can be lifted if future health inspection visits show improvements.

To properly equip your business for these inspections, make sure you have food hygiene training or a strong understanding of UK food safety regulations.

Premises licence

Certain activities require a premises licence. For example, it is a requirement for any business seeking to sell or supply alcohol, late-night food, or entertainment to obtain a premises licence from its local authority. 

So-called ‘licensable activities’ include:

• selling alcohol
• serving hot food and drink between 11pm and 5am
• film screenings
• sporting events
• live or recorded music
• dancing
• theatrical performances

For most local councils you can apply online or by post. There are some differences in the licence depending on where your business is in the UK. 

For example, in Northern Ireland, the licence equivalent, known as a liquor licence (from the county court), is a simple permit to sell alcohol. The application process is slightly different, as you will need to declare your intention to apply for the licence in local newspapers, as well as displaying information about the application near or on your premises. 

Personal licence

In a business that sells alcohol in England, Wales or Scotland, at least one person must obtain a personal licence. This person is the designated premises supervisor and must authorise others working for the business to sell alcohol. 

To obtain this licence, an individual must be 18 years old, hold a licensing qualification and be willing to disclose relevant criminal convictions to their local council. 

Once you have obtained this licence, you can serve as the designated premises supervisor for any business. There may be exemptions if you are on community premises or operating within a members’ club. 

In Northern Ireland, no licence is required beyond the premises licence.

Pavement licence

If you’re running a food business such as a café, restaurant or food truck and want to provide your customers with outdoor seating on a public pavement, you will need to obtain a pavement licence. 

To obtain a pavement licence, you must apply to your local authority and provide information such as descriptions of the furniture that will be used and the area of public highway you plan to place it on. 

Even if you have spacious premises, putting tables and chairs outside in the summer months can increase the number of customers you serve and make your business more attractive. 

To feed your customers, you are probably going to need some start up funds. At this point in the process, you will have drawn together a budget and registered your business, leaving you ready and prepared to seek funding. 

Food businesses vary significantly in size and scale. Loans, grants and even your own personal finances are all possible sources of funding for your food business, but there are several different ways to gather the capital you need to achieve lift-off. 

For more insight, check out our full guide to funding a start up or small business.

Then there’s the matter of where to keep both your start-up money as well as any income you generate. While sole traders can choose to use a personal account (if their bank allows), limited companies and partnerships must have a separate business bank account as it is a legal requirement to keep their personal and business finances separate. In any case, you may decide to opt for a separate business bank account as it can also make managing finances easier, as your various financial comings and goings will not get muddled with personal spending.

To feed your customers, you are probably going to need some start up funds. At this point in the process, you will have drawn together a budget and registered your business, leaving you ready and prepared to seek funding. 

Food businesses vary significantly in size and scale. Loans, grants and even your own personal finances are all possible sources of funding for your food business, but there are several different ways to gather the capital you need to achieve lift-off. 

For more insight, check out our full guide to funding a start up or small business.

Then there’s the matter of where to keep both your start-up money as well as any income you generate. While sole traders can choose to use a personal account (if their bank allows), limited companies and partnerships must have a separate business bank account as it is a legal requirement to keep their personal and business finances separate. In any case, you may decide to opt for a separate business bank account as it can also make managing finances easier, as your various financial comings and goings will not get muddled with personal spending.