How to Start a Food Business: The Guide to Selling Food Online
Over the past five years, Nick Collins and his team at Cleverchefs catered thousands of weddings and events all over the UK. Then, March 2020 hit. When COVID-19 shook the wedding industry, they quickly pivoted their business model.
Now, they sell food boxes online, complete with restaurant-quality meals. In two months, Cleverchefs earned over £50k just from their online store.
The Cleverchefs story isn’t a one-off example, either. Thousands of existing caterers and restaurants are now shifting to selling their food online. And that’s not all—brand-new food businesses are also popping up to meet this new customer demand. In fact, the food and grocery industry grew 605% in April 2020 compared to January and February, and this growth shows no signs of slowing down. This boost comes as the number of home-based businesses in general has also skyrocketed during 2020.
Whether you’re already a business owner and want to expand your current business model to start selling food from home or you’re wondering how to start a food business, this guide is for you. You’ll learn everything from how to identify your target market to building your brand to managing shipping logistics.
How to start a food business in 6 steps:
Write Your Business Strategy
Define Your Brand
Build a Website
Streamline Food Production
Create a Marketing Strategy
Plan for Shipping and Delivery
01. Write Your Business Strategy
Selling food online requires you to wear multiple hats. Not only do you need to have the culinary expertise to produce delicious food, you also need the business savvy to profitably run your operation. Here are the main things to think about when building your business plan.
Develop a Menu
Chances are, you already have the seed of a business idea growing in your head. The best food businesses often come from your own passions and interests, like when you stumble upon a revolutionary chocolate chip cookie or an innovative hot sauce recipe while tinkering in the kitchen. If you have a gut sense that one of your creations could be a hit, follow that instinct and start small and niche. Focus on perfecting that single item (or type of item) before trying to expand your menu too quickly.
This was exactly what G Butter did. G Butter only sells protein-packed nut butters—nothing else. They offer 12 different flavors, all with the same sugar-free, non-GMO base. By staying niche and focusing on a limited menu, they’re able to hone their craft and make a successful product.
If you don’t feel as confident in your idea, you could conduct your own market research to see how others react to it. Use your friends and family as focus groups to test food ideas or run small pop-up shops to experiment with different items.
Identify Your Target Market
Once you’ve defined the what, identify the who. Imagine your ideal customer and get as specific as possible, thinking about all the details around demographics, lifestyle, and interests and hobbies. While it can be challenging to pinpoint a very specific type of customer (after all, who doesn’t enjoy food?), the more detailed and precise you can be, the better you can tailor your product, messaging, and marketing.
Let’s look at G Butter again. The target market for fans of nut butter is huge, and filled with many competitors. So, G Butter narrowed in on a specific subset of that audience: health-conscious customers who lead an active lifestyle and want to indulge guilt-free.
We can see how they cater to this audience with the product itself (sugar-free, keto-friendly nut butters with added whey protein that can also be microwaved into a brownie) as well as their messaging (with phrases like “high-protein, low-calorie spread” and “the only nut butter in the world that transforms from a spread into a brownie”).
Create a Budget and Secure Financing
Before you start producing any food at scale, make sure you understand the total costs required to start a food business and whether you need to secure additional financing. As you’re creating your budget, consider the costs associated with setting your business up (like any initial investments in equipment and inventory) as well as longer-term costs (like labor, rent, and utilities).
A budget also helps you understand how to effectively price your items. The price of any product is based on its associated costs, including the wholesale price and labor costs.
Your profit and income will be determined by these expenses, and you want to be sure that you get the right profit margin to grow, without losing customers. In other words, if you set your retail price too low, you may end up with a smaller profit margin. Too high, and you may miss out on sales.
Once you understand your budget and forecast your profit margin, you’ll be able to see whether you need to secure additional financing. If you do need to bring in additional funds, your options include:
Getting a business loan
Turning to family and friends
Finding outside investors or bringing in a partner
Getting government aid
Establish Your Business Entity
To officially start a food business, you also need to choose a business entity (a legal structure that allows you to conduct business). The three most common ones include:
A sole proprietorship is someone who owns an unincorporated business by himself or herself, with no distinction between the owner and the business. According to the U.S. Small Business Administration, it is the simplest and most common structure chosen to start a new business.
General partnership is an agreement between two or more partners to establish and run a business together. All parties share assets, profits, and liabilities of the business.
Limited liability corporate (LLC) combines the elements of a sole proprietorship, partnership, and corporate to ensure that the owners aren’t personally liable for the business’ debts or liabilities.
02. Define Your Brand
Thriving businesses have one thing in common: a strong and consistent brand identity. Your brand lives, breathes, and evolves as your business grows, helping improve awareness, loyalty, and engagement among your customers. Here are three ways to start building your brand.
Choose the Right Business Name
Your company name is the foundation of your business’ identity and your opportunity to make a solid first impression with potential customers. Unique, easy-to-understand business names can dramatically help with brand awareness and marketing efforts, while the wrong name can confuse customers or even cause business and legal challenges.
Some best practices for choosing the right business name include:
Be descriptive, but keep it simple
Choose a name that can grow with your business
Avoid hard-to-spell names
Make sure the name is available. Search the federal database of the U.S. Patent and Trademark office, see if the domain is available, and do a Google search to see if any other companies are using the same (or similar) name.
For more help brainstorming the right business name, visit our business name generator. Simply type a word or two that you want to include in your business name and get dozens of possible names to choose from.
Design Your Brand Elements
While your company name is part of your business’ brand, it encompasses so much more: your logo, colors, font, and everything in between. Building brand awareness establishes trust with your customers, which makes them more likely to buy.
Once you choose a business name, the next best step is to design a logo, which will act as the symbol of your brand. The rest of your branding efforts—the color palette, design, and font—will naturally fall into place once you have a logo. You can hire a designer for this step or do it yourself using a logo maker.
Melbourne Food Squad is a perfect example of how a memorable logo can be the focal point of your brand experience. The logo itself immediately conveys food, so customers understand the business’ offering right away. The strong, dark color of the cow matches the bold font of the company name and is balanced by the body copy font, which is lighter and thinner.
From a branding perspective, make sure your packaging incorporates your logo, colors, and fonts. The goal is for customers to have a cohesive brand experience, from ordering food on your website to receiving it at their doorstep.
From a logistical perspective, your packaging should also serve its core purpose: keeping your food fresh and ready to eat. If you’re selling and delivering made-to-order meals, your packaging should keep the food warm and presentable by the time it reaches your customer. If you’re shipping food items to customers miles away, your packaging should keep everything intact and fresh.
Another important consideration is labeling: Food manufacturers are responsible for developing labels that meet legal food labeling requirements. Proper labeling, including nutrition labeling and labeling for the major food allergens, are required for most prepared foods.
03. Build a Website
When selling food from home, your website becomes your storefront. As a result, it’s essential that you create a consistent, intuitive digital experience that delights customers and ultimately, increases sales. Here are four best practices when building your website.
Choose a Domain Name
Now that your food business has a name, align your branded domain as closely as possible with it so customers can find you. Keep in mind that a domain will cost around $10-$15 per year. You can usually purchase your domain name through the eCommerce platform you will use to build your online store.
Leverage Website Templates to Get Started Faster
Starting an online store from scratch not only requires a big investment in design and engineering resources, but also the inspiration to dream up the ideal website. To make this process easier, use a free food and restaurant website template that incorporates all the new bells and whistles in web design trends like parallax scrolling, video backgrounds, and countless image galleries. In addition, each eCommerce website template is completely customizable so you can add your own images, text, and videos.
Prioritize Product Photography
Selling food online means that customers won’t be able to see, touch, or smell the items before they order. This makes product photography even more important—your goal is to bring your culinary items to life on-screen so customers feel confident to buy.
Jennie’s Kitchen NYC has invested in high-quality, lifestyle shots of all their gourmet takeout meals. Each image is beautifully styled, highlights the main ingredients used, and inspires customers to click the “Buy” button.
Incorporate Design Elements that Boost Sales
While beautiful product photography can definitely boost sales, there are also a number of conversion rate optimization tactics you can incorporate in your online store to increase orders even more. Some best practices to expertly sell online include:
Adding clear CTAs
Designing for mobile
Highlighting customer reviews
Creating a clear navigational structure
Offering payment methods
04. Streamline Food Production
Before you start selling food from home, ensure you have all the necessary licenses, equipment, and ingredients to successfully meet customer demand.
Secure the Appropriate Licenses and Permits
All businesses require some form of licensing to operate, but the food industry has particularly strict requirements for food safety due to the inherent risks of dealing with items that people consume. The specific types of licenses and permits you need depends on what type of food you’re offering and where you’re located.
Some types of licenses and permits could include:
A business license from your city or state that enables you to conduct business
A food handling permit
A resale license to be able to buy ingredients at wholesale
A food license for making and selling food from home
Get the Right Equipment
You can’t start a food business without the right equipment to produce items at scale. This means you have to think of your home kitchen like a restaurant: What do you need to buy in order to operate as efficiently as possible? How can you turn your space into a more commercial kitchen?
Some items to consider purchasing or renting include:
Saute and frying pans
Kitchen utensils like tongs, knives, cutting boards, and ladles
Like a restaurant, you need to understand your supply chain and your inventory needs in order to buy accordingly. This will likely be a matter of trial and error—you want to buy enough ingredients that you can meet customer demand, but avoid any food going bad.
Depending on what you’re selling, look for distributors who work directly with farmers or develop direct relationships with suppliers.
05. Create a Marketing Strategy
Unlike an actual storefront, you don’t have the benefit of attracting potential customers who happen to be walking by. Instead, you have to purposefully invest in marketing your online food business.
Invest in Social Media
Social media is one of the best ways to engage directly with your existing audience as well as potential customers. Experiment with organic social media campaigns, like posting photos of your menu items on Instagram or sharing behind-the-scenes videos of your culinary process on TikTok or Snapchat.
You can also invest in paid Instagram or Facebook ads, allowing you to target your ideal customer and promote your products at a very low cost-per-click.
Optimize for Search
Write unique meta titles and descriptions
Make your website mobile friendly
Claim your business on Google My Business and fill in your profile
Sign up for as many local directories as you can
06. Plan for Shipping and Delivery
You’ve defined your business strategy, established your brand, and built your website. Now, orders start coming in. How do you get your food to customers in a timely, secure way? Depending on what you’re selling, you can choose to enable order pickup, deliver items locally, or ship orders domestically or internationally.
Enable Order Pickup and Local Delivery
Does your food business function like a restaurant, offering take-out, made-to-order meals? If so, your shipping strategy should focus on enabling curbside pickup and local delivery.
Order pickup: Make sure you can take orders over the phone as well as through your website and be able to appropriately manage the queue so you can give customers an accurate pickup window. Once they get to the pickup location, consider offering curbside pickup or contactless pickup.
Local delivery: Decide whether you want to hire additional employees dedicated to delivery or use a third-party delivery service like DoorDash or UberEats. For both these options, consider increasing your menu prices or adding additional fees to accommodate these costs.
Define Your Shipping Guidelines
If you’re selling packaged food items, like candy, cured meat, hot sauces, or cookies, it’s important to establish clearly defined eCommerce shipping guidelines. This allows you to streamline operations and be able to respond to customer queries. Some questions to ask yourself include:
Will you charge for shipping? If yes, how much?
Where will you ship to? Are you planning to ship only in the continental United States or will you also ship abroad?
How quickly will you ship the items (two-day, next-day, priority mail)?
Which carriers will you use?
Shipping food also carries additional challenges, especially when sending something outside of the country or even across state lines. Make sure to research any potential restrictions in your destination states or countries.
Ready to put these best practices to use? Create an eCommerce website for your online food business and start selling today.
Emily Esposito Fulkerson
Emily writes about tech, design, and productivity. You can also find her reading the Inspector Gamache series, buying indoor plants, or hiking through the Pacific Northwest.