Set-backs Faced by Food Startups Around the World

By | May 14, 2015

Food startup is another sector which is growing drastically following the tech startups. Food startups range from small restaurants to ordering food online service. A great business idea and good knowledge about food and cooking are not enough to make any food-based business successful. Just like any other businesses it demands planning, finance and readiness to go back to the drawing board.  Emily Sullivan, coordinator of the Cleveland Culinary Launch, “People is the food business need a different type of training than other entrepreneurs.” Starting and running a food startup is not as simple as selling clothes or handbags online. They have their own set of set-backs and challenges. Some are listed below:


1. Limited access to the market insights:

Getting to know the complete market insights is very important to make good business plans. It is comparatively easier to study the market for clothing and accessories, but it is not an easy task to get complete the understanding of the market for food. Also, it very easy to end up in wrong conclusions in the food industry. Some simple opinions can take one off-shore from the actual market. The information pertaining to the food industry in expensive and usually inaccessible for the small and medium scale enterprises. Many brand owners do not understand the importance of the market research. It has to be known that failing to do so would cost the startup a fortune.

2. Menu Too Big:

Whether it is a small restaurant or online food ordering app, it is a must to have a food menu. To create a good menu it is important to keep in mind the following factors – number of items in the menu, price of the items and coherent theme maintained throughout the menu. It is the task of the entrepreneur to keep the menu size at check. Instead of offering 5 page menu, try to provide three page menu with limited number of dishes and doing them real well. Larger the menu, longer the time taken to order and more ingredients to stock. The same applies to the online food ordering app too. It is wise to keep the number of restaurants in the website at check. Too many restaurants may end up confusing the customers. Also, keep the menu aligned to company’s unique proposition.


3. Failing to create Unique Selling Point:

Whether it is a food ordering app that includes many food places or restaurant or website that lists all the restaurants or startup like Blue Apron that sends home ingredients with recipe to cook, it is vital for the customers to know what you are dealing with. The company should have a unique aspect or niche that lets the customers choose them over their competitor. It is important for a startup to meet its customer expectations but also to have a strong place in the market, it is very important to exceed customer expectations. The unique and original idea of the business should be able to attract the customers every time. That  is what helps the customers remember the company on a long-term and helps in making the unique connection.

4. Partnering with the wrong company:

When it comes to food ordering/delivering app, they are in large number these days mainly because they are easy to startup. The startup company has to be cautious with whom they partners with or whom they list under their website. Background study has to be done to check their food quality and service. If the food quality is not up to the standards, it would only end up spoiling the reputation of the website. Also, if the delivery is not on time, it would backfire on the site through which they ordered. The commission or the payments details have to be made clear before finalizing the deal. There should not be anything left vague in the terms and conditions as it may lead to ambiguities between both the parties.

5.Not Hiring and Training Staff:

In small-scale restaurants, it is a common problem to hire and train the right employees. Hiring a wrong person can have a high turnover rate in the company. An incompetent employee can ruin the reputation and the customer base of the company. Selecting the right employees can reduce the time and the cost into half and improve customer satisfaction. Employees who smile or acknowledge or show small happy gestures at regular customer can take business to great heights. They have to be enthusiastic and motivated to pursue the goals and face the challenges when it arises. Co-founder of Bhojanshala said, “getting a hardworking and creative team is the biggest challenge, since retaining their customers’ trust along with technology and service are their priority.”

6. Lack of proper branding:

The value of branding are often underestimated by the entrepreneurs. Whether it is the company logo or packing of the product, it means the lot for adding value to the company. 99.99% of the first time customers buy a product based on its visual impression. If it is a restaurant, it is very important to give important to the setup and ambiance of the place, if its website based business the website design and the pictures posted on it plays the vital role.

7. Not Calculating the Cost Right:

Unlike other business, where calculating the prices is quite easy, it is quite difficult to calculate a food item as it involves many ingredients, time, service, utensils to make them, packing and delivery. It is quite common to not calculate the hidden costs incurred in the business. If the company fails to calculate it right, the whole company can come to ashes. Alok Jain, CEO of Yumist says, “Being in the daily meals market, we work with very low ticket sizes starting at Rs.50 ($1) with no minimum order requirements or delivery costs. Considering the costs associated with the food production, packaging and delivery, maintaining strong unit margin is our biggest challenge.”

8. Deterioration of the quality due to expansion:

Finding niche is no problem but maintaining the quality and food service gets toughened as the company expands. Taste is the core for the food industry. If there is change in it as the company grows to other places, the whole point of expansion is lost. When Big Gay Ice Cream were thinking about expanding their business, many questions had arisen. Quint, the founder of the company raised questions like, “How do we serve more people and not to micromanage quality?, We want our name but do not want to relinquish power?” The company should have a clear system which has to be carried out no matter where they enter into. This is only possible with the right system and the right people who believe in the business. Serving right in one place and leaving out in another place is not good for a business to have a healthy position in the market.