An increasing number of suppliers, manufacturers and wholesalers have shifted to selling their products directly to consumers, either by launching their own food brands, selling online or by opening restaurants. Although making this leap can be very fulfilling and lucrative, it can also present some tough challenges that food businesses should be aware of before they start the transition.
Consider the following tips to get the full picture of what it takes to make this type of leap.
1. Evaluate whether the product is ready
Just because a food supply business is successful doesn’t necessarily mean the firm is prepared to begin selling to the public, so business owners must first determine whether the product and process are ready for a consumer-facing environment.
Ron Goodman is a Culinary Institute of America-trained chef who segued his seafood smokehouse into a successful restaurant. Goodman joined forces with Greg Casten of seafood supply firm Profish and together they launched The Tavern at Ivy City Smokehouse. Goodman believes that their longtime experience in the Washington, D.C., food industry helped prepare them for what to expect on the restaurant side.
“We started talking about the exciting environment we are currently in, where so many American companies are making quality whiskey, wine, beer, cheese and smoked foods, and that the public has become really attracted to the locally-made, artisan concept,” Goodman said. “The good name from the original business helped the transition. In restaurants around town, people knew the quality and consistency of our smoked fish and Profish’s trucks are all over the city, so people knew this as a place to get fresh and high quality seafood.”
That was an important consideration before opening the restaurant, since it created a name for the eatery. The Tavern was able to garner marketing attention without even trying as soon as it debuted, thanks to the existing reputation of the products. “We got some attention from media outlets pretty quickly on,” Goodman said. “We’re lucky in that respect, as the concept developed pretty organically.”
2. Do your homework
Food suppliers or artisan food companies that want to go into foodservice should do their homework before committing to a restaurant model, Goodman advises. “The restaurant business is a hard business. Even though we’re suppliers, both my partner and I started out in the restaurant industry so we knew and understood the business. It’s very detailed, it’s difficult to staff, customers are hard to please — it’s a lot to take on. It looks very inviting but is a very attention-demanding business, so people should definitely do their homework on it.”
For instance, it may take some research to determine how to price meals for your target audience and neighborhood, and then sync that with your desired food and labor costs, as well as the many overhead costs. In addition, get to know the staffing laws and challenges in the area where the restaurant will be. Evaluating whether the potential eatery is in a neighborhood with good transportation to and from a wide pool of staff versus one where it might be hard to find servers is another important consideration.
3. Know that there will be bumps along the way
Opening a restaurant is similar to other businesses in that it presents the near-certainty of facing unexpected challenges along the way, no matter how much research has taken place.
“One challenge is that it always costs more money and takes more time to build the facility,” Goodman says. “For us, our biggest hurdle has been finding and training staff — it can be time and dollar consuming to train people to understand the service industry if they’ve never worked in the field before.”
The challenges won’t necessarily subside after the restaurant is in business, since every company faces issues from time to time, but knowing that bumps will come up along the way can help restaurateurs prepare and be ready to face them when they do.
___________________________________________
If you enjoyed this article, join SmartBrief’s email list for more stories about the food and beverage industry. We offer 20 newsletters covering the industry from restaurants to food manufacturing.