As the owner of a growing food business, you may be feeling an itch to open a physical location, or you’ve had customers ask “when are you opening up your own shop?”. Maybe you’re asking yourself “should I open a restaurant?”
Brick and mortar establishments have always been a part of the food landscape, and traditionally, many food businesses start as restaurants, bakeries, or cafes. However, the pandemic and years since have revealed that food businesses can thrive without permanent physical locations. In fact, some of the most exciting bakeries in the US this year operated for years as a pre-order only business, serving exciting food to devoted customers.
Each path offers its own set of benefits and challenges, impacting your business’s growth, profitability, and sustainability. Let’s get into the important considerations for both, helping you pick the best format for your food business.
The Pre-Order Model: Efficiency Meets Flexibility
Low food waste
This model allows you to sell only the amount you make, eliminating food waste and ensuring every dish prepared finds a customer. No wasted prep time or ingredients: a win for both the environment and your bottom line.
Save on operational costs
Your operating costs will also be lower without the need for a physical storefront, which means bigger profit margins. You’re saving on rent, utilities, insurance, front of house staff, maintenance costs, equipment, and many more unexpected costs.
Flexible scheduling
Unlike a storefront, your pre-order business doesn’t need to be open every day. You can choose when to prep, cook, and offer your food for pickup. Customers meet your schedule, not the other way around.
Centralized operations
One sales channel means one software. Hotplate allows you to easily post menus and process pre-orders from your customers. With all your orders in one place, you can easily reference your prep list, packing tickets, and insights from each day you operate.
Plus, with Hotplate’s automatic text reminders to customers , you can effortlessly create a base of repeat customers, bolstering your sales with every new menu launch.
Marketing challenges
A pre-order model sounds pretty great, but it’s not without its drawbacks. Without a storefront, you miss out on foot traffic that can organically lead to customers. This model does require robust self-marketing and promotion strategies to attract and retain customers. That means dedicating time to your social media channels, regularly sending marketing texts and emails, and engaging with your customer community.
Brick and Mortar: Creating a Memorable Customer Experience
On the other side of the spectrum, brick-and-mortar restaurants offer the chance to curate a unique customer experience, from ambiance to service. Your brand and personality can really shine through a physical space. This model allows new customers to simply walk by and discover you organically, increasing your visibility and engagement in the local community.
High operating costs
High rent and operating expenses can significantly cut into your profit margins, and as a business owner, you’ll have to factor in expenses like employee payroll, insurance, utilities, equipment costs, and more into your pricing. Not only can this be a mathematical headache, but you may have to pass along all these costs to your customers through higher prices.
The risk of inventory
Being consistently open also means you’re playing a daily guessing game of how much inventory to stock. On good days, you’ll sell out, but factors like weather and traffic can lead to slow days where you’re throwing away lots of food. That means hours of work and raw ingredients wasted.
Limited reach
While a physical location can mean being a consistent presence in your community, it also means your reach is limited to only the immediate area. It can be hard for customers in other parts of town to discover or reach you.
Making Your Choice: Consider starting small
Ultimately, a pre-order business presents a lower barrier to getting your food business started – all you need is a kitchen. You can get started with low operating costs and really focus on building a devoted customer base that’s obsessed with your food.
After a few months or maybe even years operating as a pre-order business, it may be time to re-evaluate opening up a brick and mortar in order to better integrate your business with a local community. At that point, you may also have a devoted following that’s had a chance to taste your food, and will be excited and receptive to a permanent location.
Our hot take
Hotplate works with hundreds of chefs that have sustainable, growing businesses that operate without a storefront, and are able to serve several customer communities through offering various pickup points around their city. We’re convinced it’s possible to be the hottest business in town, without ever opening up permanent doors.