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Food and beverage industry overview
The food and beverage industry includes all businesses involved in the production, distribution, and sale of food and drinks.
The global food and drink market is expected to grow at an annual rate of 11.9%, reaching a market volume of $3.8 billion by 2027. This increase sharply contrasts the declining industry performance over the last three years.
Contributing factors to this performance are:
- Expected ease of inflation over the next year.
- Continued innovation in beverage and grab-and-go options.
- Increased interest in health-conscious options.
- Lifestyle changes as consumers increase travel and return to the office.
Additionally, the increased adoption of app-based and eCommerce purchasing options will continue to fuel discretionary spending in this category. Portable eating, tech-based purchasing, and alternative health and wellness products or services all show great promise for new entrants.
How to start a food and beverage business
To start a food and beverage business, you need to focus on the following:
1. Identify an idea that meets current demand
Identify your target market and potential competitors. Then, develop a unique product or service that serves a specific need—such as a particular cuisine, dietary need, or a unique dining experience.
2. Write a business plan
Create a business plan that thoroughly explains your business model, operations, pricing strategy, and financial projections.
3. Handle health, safety, hygiene and legal compliance
Food and beverage is a highly regulated industry with additional legal, health, and safety requirements. You must develop strict health and safety standards, prepare a staff training plan, and apply for permits or licenses relevant to your food or beverage offering.
4. Operations and relationships with suppliers
Establish relationships with reliable suppliers to acquire consistent quality ingredients. Focus on implementing an effective inventory management system that helps minimize waste and unnecessary expenses.
5. Location, layout, and staffing
Purchasing behavior and workflows are rooted in your business location and how your business is presented. Carefully choose a location and layout that fits your customers’ expectations and provides a healthy working environment for your employees.
Then, focus on training to ensure quality service, adherence to safety protocols, and the representation of your brand values.
6. Startup costs and financial management
Hefty upfront investments can be needed to start a food and beverage business. Kitchen equipment, menus, signage, POS systems, and mobile ordering technology scratches the surface.
You’ll likely be operating on thin margins, making effective financial planning necessary early on. Take direct inventory of what it will cost to start and run your business for the first year. Consider if you need funding and put a system in place to forecast and review your performance regularly.
7. Marketing and branding
You will have plenty of competition as a food and beverage business. Every restaurant, big brand, delivery service, grocery store, and mini-mart is a potential alternative.
So, don’t sleep on your branding and marketing efforts. Remember your target market, choose the proper channels, and develop a memorable visual identity that fits your mission.
For more on starting a business, check out our full selection of startup resources.
How to write a business plan for a food and beverage business
Here are some specific sections and information to focus on when writing a business plan for a food, beverage, or restaurant business.
The food and beverage industry is a highly competitive market with established competition and a steady influx of new entrants. Thoroughly document who you will be competing with, how you are different, and your ideal customers. This information will influence everything else about your business.
You’ll notice a trend through the rest of these, but you need a detailed description of how you will make money. As mentioned before, food and beverage businesses often operate on incredibly thin margins.
You need to be sure that your revenue streams make sense for the market, can consistently bring in cash, and will be sustainable long-term.
Menu and product offerings
Specific to this industry, you must cover what you offer and provide a sample menu or product list. It should directly relate to the interest of your clientele and showcase what you offer.
Describe your location, including a layout of your store or restaurant and details for how your business will operate—how you will work with suppliers, specific workflows, equipment needs, and staffing.
Focus on demonstrating quality and efficiency when outlining your operations, and don’t forget to revisit it as you run your business.
Provide detailed financial projections to map out your revenue and expenses. At a minimum, cover startup costs, break-even analysis, profit and loss forecasts, and cash flow statements.
Include any assumptions behind your projections and map out funding needs if you intend to pursue a loan or other investment.
You can use any of our food, beverage, or restaurant sample plans to ensure you cover the right information in your plan. For a detailed overview, check out our complete business plan outline.
What is an example of a food and beverage business?
Food, beverage, and restaurant businesses include:
- Agriculture and food production
- Food processing and packaging
- Alcoholic and non-alcoholic beverage production
- Fast food
- Food transportation services