Market Research: What are Believed to be the Biggest Barriers to Setting up a Food Business?
Biggest Barriers to Setting up a Food Business
- 33% of respondents saw finding a property as the most significant barrier.
- 23% of respondents felt staffing, marketing, or both are the greatest barriers.
- Only 3% of the respondents felt design and fit-out is a barrier.
- 40% of respondents claimed funding is the biggest barrier.
While we might expect financing to be a significant obstacle in any business, funding as a barrier to setting up a food business did not dominate opinion overall. Building and operating delivery kitchens at scale requires high capital outlay, coupled with the cost of running a delivery app and logistics business – it’s no surprise start-ups need to regularly go through funding rounds.
Respondents also saw finding a property as an issue, despite 165,000 privately owned commercial and business premises remaining empty in the UK (Source: M&G Plc, June 2021). The key challenges with finding a property are around planning, use class, and having the required level of utilities on site.
And less than a quarter (23%) of respondents believe that staffing, marketing, or a combination of both is a barrier. This came as a surprise to the team, as Charlie Farr explains:
“One in 20 people who want a job can’t find one [according to the Office of National Statistics]. But it doesn’t mean they are skilled in hospitality and catering.”
“Many people with catering skills were forced to gain employment in other industries during the pandemic and we expect it to take a while for people to migrate back to F&B. And this puts a lot of pressure on starting up a food business.”
“On top of this, a lot of those staff now don’t want to go back into those jobs post-pandemic, and have migrated back to other areas”.
Marketing may also be a bigger barrier than some people think.
Multi-brands delivering through virtual kitchens don’t have physical storefronts to generate awareness, meaning that having the correct cut through and impact requires specialised marketing support and more often than not a heathy budget to back it up.
For perspective, McDonald’s, with 1300 restaurants, spent £89m on advertising in the UK during 2020 (Source: Statistica).
Yet, the most surprising result is that only 3% of respondents felt that design and fit-out are barriers to setting up a food business.
“This may be because people are more aware of the modular owned or rented commercial kitchen concept than we thought”, claims Charlie.
And the optimism here is also felt in the second Poll relating to operational expectation.