Making the decision to run a food business comes with many risks, as well as opportunities. Some of the factors that could increase financial and operational risks to your business include changes in health and safety standards, especially with outbreaks of illnesses, price fluctuations with ingredients and food and equipment suppliers, and the success of new products when introducing product variety to your offerings and menus.
The increasing levels of uncertainty and potential risks involved in running a food business should be taken into consideration, and business owners should look to combat these risks with innovative solutions that can be used to take advantage of new opportunities for growth.
1. Changes in Health and Safety Standards
Health and safety standards and protocols are always changing, as new health science information becomes available and new illnesses emerge. Adhering to these ever-changing standards puts additional strain on your growing food business. However, meeting these codes is essential to being successful.
When your business includes the handling of food products, adhering to health regulations is always important. Health and safety standards are there to protect customers, as well as your own employees, from things such as illness outbreaks and allergy contamination.
Following the industry standards can also protect your business. For example, they may help prevent kitchen shutdowns due to illness or large-scale product recalls. Ensuring your kitchens are safe and producing safe products will promote customer confidence in your brand and some financial security.
There are, however, costs associated with keeping up with health and safety protocols. Your employees must all be well-trained on safety procedures, equipment must be well-maintained and up to date, and new equipment such as air filtration and antimicrobial systems may be required. Being careful and strict with recommended safety standards may just put your business ahead of potential risks to come.
2. Price Fluctuations
Food price inflation and fluctuation will always be an issue when running a food-based business. The potential risks increase when there are also supply chain disruptions and food shortages involved. Price fluctuations may be seasonal, or due to local or industry-wide issues and disruptions.
Some risks of not paying attention to price fluctuations, as well as changes in customer demand, include excess and spoiled inventory, lower profit margins, increased product waste, and higher operating costs. Business owners must plan and account for price inflation and try not to pass the costs on too much, as customer retention is vital to growth and success.
One way to deal with seasonal fluctuations is to offer rotating seasonal menus. For example, if your business offers baked goods such as pizza or bread products, you may want to consider seasonal toppings that change with ingredient availability. Another way to protect your budget and account for supply and price fluctuations is to start with reliable products such as frozen breads or pre-made pizza dough. However, when choosing commercial suppliers for frozen or pre-made products, make sure to select suppliers who use natural and high-quality ingredients. Your customers will appreciate the difference, and your attention to detail.
3. Product Variety
If you are starting a food business, it may feel like you are entering a saturated market, with the competition very high. If you are already established, you may be wondering how to keep up with new and innovative businesses entering the food industry.
Adding product variety to your menus may help bring new customers to your business, and keep current customers coming back. Innovation is important to the success of any food business. Consumer tastes change both seasonally and over time, with changes in lifestyle, economic conditions in your area, and higher consumer awareness of food standards and trends. This calls for constant evaluation and shifts in your product offerings.
If your business is located in a high traffic area, baked goods can bring in a lot of new customers, as well as give your current customers a reason to return. New products can create buzz. Innovative ideas, such as making use of trendy or seasonal ingredients, can get people excited. Consider adding baked goods, or a new variety of pastries, breads, or pizza products to your menu. This could boost profit and attract customers looking for convenience or simply exciting new food options.
Adding new food products such as baked goods to your food business, however, will come with additional costs. New menu items will require new ingredients, and even possibly new food preparation equipment. One way to help keep new products within your budget is to avoid preparing each new product from scratch, and instead establish relationships with reliable suppliers, such as commercial bakeries, which can provide quality products like frozen bread dough or pre-made baked goods. Innovate and add seasonal and trendy toppings and ingredients to these products to create exciting menus for new and existing customers to enjoy.
As with any business, food-based businesses face risks ranging from unpredictable supply chain issues, to shifts in health and safety standards, to creating customer retention with exciting product variety. While these risks can be intimidating, they are not insurmountable. It is important to also consider the many opportunities available to help establish or maintain your successful food business despite the challenges.