How local businesses can weather the growing competition

Becoming self-employed in the hospitality industry: numbers, data, facts + 8 steps to success

1. Bar, café or restaurant: start up the catering trade

"If you don't become anything, you become a host" is a frequently cited prejudice. A successful start-up in the catering industry is not a matter of course, however, and newly opened restaurants, bars, pubs or cafes often disappear after a short time. There are numerous stumbling blocks when setting up a business in the catering trade. So that you do not suffer the same fate, you should deal carefully with the market and consumer behavior of your target group when starting your business. In order to realize your dream of your own café or restaurant, you first have to develop your own catering concept and of course implement it. However, you should also consider alternatives to starting a business in the catering industry, for example joining a successful franchise system.

If you want to set up your own business as a restaurateur, you should draw up a business plan. Because for financing through a bank loan, you have to show a valid business and financial plan at the bank interview. Find out more now about the special features of the business plan in gastronomy.

2. Key figures in the hospitality industry

Whether kebab shop or three-star restaurant, café or pub: the catering trade is a diverse industry with great attraction and economic power. Knowing industry data about the market and competition is therefore particularly important for start-ups and companies in the catering industry. In addition to the facts and figures, it is particularly important to pay attention to the trends in the industry in order to identify changes and innovations at an early stage and to be able to use them. The so-called industry letters, which contain a lot of detailed information on individual start-up concepts, are of interest here.

The gastronomy is divided into the classic restaurant trade and the rapidly growing system gastronomy. Also included are cafes, bars, snack bars, discos and catering companies.

According to the VR Industry Letter, the economic development of the past decade has now turned in favor of the catering trade: Since 2010, the food-dominated restaurants, bistros and cafés as well as snack bars have been able to continuously increase their sales, in 2015 by almost 4 percent (DEHOGA). In 2016, the catering industry reported an increase in sales of 2.4 percent, and 2017 saw an increase of 3.0 percent in the catering sector (destatis).

The Federal Statistical Office provides numerous data (as of 2017):

  • There are approximately 221,309 hospitality companies
  • Approx. 208,000 of these are conventional companies with service (restaurants, pubs, snack bars, cafés, hotels)
  • Annual sales are € 45 billion.
  • The number of employees in the hospitality industry is 2.25 million.

Regardless of whether it is a café, bar, restaurant or ice cream parlor: there are numerous franchise systems that enable a start-up in the catering industry. In this way, you can quickly start with a concept that has already been successfully tested.

Start with a franchise

3. Successfully self-employed in the catering industry

If you want to become self-employed in the catering industry, you must not lose sight of the general economic conditions. Expenditures for food and drinks of all kinds - be it in the pub around the corner, in the ice cream parlor, in the café or in the starred restaurant - are part of private consumption. They are often the first expense left out when people need to save. You should take this into account in your calculation.

You should always keep an eye on developments and changes in the consumer behavior of your customers and recognize them at an early stage, as this is the only way to be successful in setting up a business in the catering industry. Questions that have to be asked are:

  • Concept for the establishment in the catering industry: Which concept do you want to implement and what sets you apart from your competitors?
  • Target group for start-ups in the catering industry: Who will your guests be? Is your target group big enough?
  • Offer of establishment in the catering industry: What do your future guests expect? What does your target group want?
    It is primarily about the food and drinks as well as the style of your restaurant. However, you should also make sure that you are convinced of this concept so that you are fully committed to the matter.
  • Recognize trends for start-ups in the catering industry: Keywords for current trends are: organic and regional food, entertainment and adventure gastronomy, exotic cuisine, etc.

Other important factors for a successful start-up in the catering industry are location and competition:

  • Choose your location for the catering industry wisely and check numerous factors such as: accessibility, proximity to customers, walk-in customers, attractiveness.
  • What alternative offers in the catering industry are there near your location, what are the prices with the competitors?
  • The key question is whether your hospitality industry will fit in the neighborhood you have chosen.

4. Industry associations: advice and information

Professional and business associations represent the interests of restaurateurs in the hospitality industry. They help with problems, network their members and try to influence politicians. As a business start-up, you will find all the information you need here, such as addresses, telephone numbers, emails and links to the relevant industry associations that are important for your catering trade when starting up:

  • Professional Association of Consultants for the Hotel and Catering Industry e. V. (B.I.G.): The association trains its members and supports their exchange of experience as well as their cooperation with one another, thus making the range of advisors more transparent.
  • Federal Association of System Gastronomy e. V. (BdS):This association is the amalgamation of system catering companies in Germany. It represents the interests of the members in matters of politics, media and other industries, employee organizations and other institutions.
  • Bundesverband Schnellgastronomie und Imbissbetriebe e. V. (BVI):According to its own information, the BVI is the only employers' association that specifically represents the interests of all snack, grill and fast food businesses, i.e. the entire fast food industry.
  • German Hotel and Restaurant Association V. (DEHOGA):DEHOGA looks after the interests of the hotel and catering industry in Germany. It is divided into 17 regional and three professional associations: Hotel Association Germany, Union of Tenants of Motorway Service Companies and the Association of International Caterers in Germany. In addition, there are the specialist departments for system, community and train station catering as well as discotheques.
  • Association of Gastronomy and Large Kitchen Equipment e. V. (GGKA):The GGKA is the professional interest group for the catering and large kitchen equipment trade. Its goals are to promote and enforce equal opportunities for its members.
  • Foodservice Consultants Society International (FCSI): The international association of gastronomy planners and consultants (FCSI) is committed to increasing the awareness of the services of its members among restaurateurs, hoteliers and in the industry.
  • Hotel Directors Association Germany e. V. HDV:The HDV promotes its members in professional terms, in particular through the exchange of experiences, advanced training, training of the next generation and awareness-raising work for the public.
  • Hotels, Restaurants & Cafés in Europe (HOTREC):HOTREC is the association of hotel and restaurant associations in the European Union and in the European Economic Area. She represents the interests of the hotel and hospitality industry.
  • Association of specialist planners for gastronomy, hotels and communal catering V. (VdF):The VdF is an association of individuals. The aim of the association is to ensure objective and innovative advice as well as economic efficiency in kitchen planning and to bring this in line with the interests of the client.

Our personal recommendation: install a reservation tool on your company website - these are becoming more and more popular among guests. You can also work with review portals such as TripAdvisor.

5. Successful in the hospitality industry in 8 steps

Many people dream of starting their own business and opening their own restaurant. This is a very big challenge for everyone and will not succeed overnight. The catering industry is not an easy industry. Starting a business here requires patience, concentration, leadership and a certain amount of perseverance. Depending on the location, concept and size, anything from a few months to a year or more is possible until you can really get started with your restaurant.

So that you can get started with your establishment in the hospitality industry, go through the following 8 steps:

  1. Check your founding requirements
  2. Develop a clear concept for your hospitality industry
  3. Create a well-founded business plan
  4. Secure the financing including subsidies
  5. Find the right place
  6. Observe the regulations when setting up in the catering industry
  7. Get essential insurance for your hospitality industry
  8. Register your catering business and get noticed

# 1 Review your incorporation requirements

The establishment and successful management of a catering business requires a lot more than just standing behind the counter. At the beginning there is the all-important question: do I meet the requirements to run a catering business? Can I cope with the stress of running my own catering business? If you want to become self-employed in the catering trade, you do not necessarily have to have a specific training, but experience in the catering trade is recommended. Because especially in the catering industry, you should bring technical and business knowledge with you. Operating and managing a restaurant also means being fit in the areas of human resource management and business administration: As a business owner, you should understand how to keep your employees and business books.

In the early months in particular, you can expect an enormous amount of work, a lot of stress and a lot of pressure to make decisions. A high volume of work of up to 80 hours is not uncommon. Can you handle such long hours? Are you stress-resistant and can you deal with difficult guests? As nice the feeling of being your own boss, it is also demanding. You will - at least in the beginning - work more than a normal employee. Therefore, do not rush blindly into your project, but prepare yourself accordingly. If you don't want to manage your catering business alone and hire employees, you should also have a certain degree of leadership and social skills.

So: are you able to work independently, make decisions independently, take responsibility? Can you lead employees? Are you physically fit and productive? Will your family support you in your project? Not every new entrepreneur can meet all of these requirements. You should bring these qualities with you:

  • ambition
  • Operational readiness
  • Willingness to take risks
  • Resilience
  • Professional Experience
  • Sense of responsibility
  • Leadership experience

In addition to the personal ones, there is of course also the competition and industry-specific challenges such as finding suitable personnel or rising operating costs, which should not be underestimated as stumbling blocks. But don't let that intimidate you. As a founder and entrepreneur, you are always faced with challenges. The more prepared you are and the more familiar you are with the foundational knowledge you need, the greater the chances that you will be successful in your hospitality business.

Do you have all the founding requirements? What are your strengths and weaknesses that you need to work on? You can find out with our free start-up test.

To the start-up test

# 2 Develop a clear concept for your catering business

Whether you opt for a "sausage oasis" in which there are only sausage specialties from sausage lattes to raclette and fondue, for a vegan café or rather for a Vietnamese restaurant - it is important that you get the idea yourself are enthusiastic; because a sophisticated gastronomy concept is the key to long-term success. So stand out from the crowd with your concept. And try to perfectly coordinate your concept in every detail. But what does a coherent gastronomy concept entail?

Basic considerations for the gastronomy concept

Often future restaurant owners have a clear picture of the concept of their catering business, but not always an eye for factors such as product range and target group. A coherent concept for a catering business includes the following components:

So what is your concept? Is it a more classic concept, such as the home-style restaurant, the all-you-can-eat restaurant, the Italian or the wine bar around the corner? Or is it something completely new? For example, a cultural café with regular live acts or restaurants that are deliberately only on the market for a short time and then disappear again. We're talking about the so-called pop-up restaurants.

What exactly is a pop-up restaurant and how does it work?

For a long time now, one place after the other has been popping up in the catering industry and disappearing again just as quickly. More and more restaurateurs are relying on temporary restaurants and bars - we are talking about the so-called pop-up restaurants and food trucks, which are now also vying for the favor of guests.

The concept is quite simple: Pop-up restaurants open their doors for between a day and several months, then they change their location. Does that sound like a lot of work? Not at all, the advantages are obvious. It is possible to try out for a limited period of time whether the planned concept will work and how the offer will be accepted by customers. For some companies there are also seasonal fluctuations with lulls in sales. A pop-up restaurant is a good option here because you don't have to run it all year round and therefore don't have to pay. In this type of restaurant, entrepreneurs clearly focus on trying something new. The makers rely on scarcity as a marketing concept. The restaurant and its delicacies can only be visited for a limited time, which of course puts the guests under pressure, because they want to visit the new pop-up restaurant before it closes again.

Or do you want to set up an independent existence in franchising with a business idea? As an alternative to setting up an individual company in the catering industry, franchise is a good alternative. Because here the franchisor already provides a tried and tested business model. Find out how to open a bar, restaurant or café via franchise in seven steps.

# 3 Create a solid business plan

There are many good reasons why you should need a hospitality business plan. One of them is problem identification: the foundation planning helps you to identify problems in your restaurant concept at an early stage, such as a bad location or a menu that is not yet completely round. And another: Without a business plan, no bank will provide you with financing. Because without a business plan, the bank cannot see in which project they are investing their money.

Price calculation in the catering industry

When putting together the menu, it is not only important to combine an attractive offer or perhaps to invent new creations. Carefully calculate the prices for your dishes based on the purchase prices of the ingredients and your operational costs. The cost of goods should ideally be between 25 and 30%.

Financial plan for the catering industry

Financial planning, which shows you the economic potential of your business idea, is part of a successful business start-up in the catering industry. So that you can quickly and easily determine whether your project is worthwhile, we have developed the catering financial plan short check. From the calculation of one-off and running costs, the determination of sales, the calculation of the capital requirement to the profit at the end of the year, our free tool covers all important areas.

# 4 Secure the financing including subsidies

Do you have enough equity to start your hospitality business or do you need a loan? In order to apply for funding, it is important to be able to present a well-founded business plan that shows that your catering business concept will still be good in 5 years. Because especially in the catering industry, the competition is enormous, more and more restaurants are being opened, with more and more unusual ideas. Also think of alternative financing options, such as franchising. In addition, as a business start-up in the catering industry, you can apply for various state subsidies.

# 5 Find the right restaurant and take care of the right basic equipment

There is probably no other industry where the location is as important as it is for the catering industry. Most start-ups, however, choose a location based on factors that appear positive for the founder himself, but neglect more important factors from the perspective of the target group and for the success of the start-up. Your bar should be opened where your target group is and is easily accessible for everyone. In addition, the attractiveness of the exterior, the entrance area and the guest areas is important. You also need sufficient storage space, customer toilets, enough seating and and and and. Put your future restaurant through its paces and don't neglect anything. As an alternative, you can also take over an existing restaurant.

Carry out a detailed location analysis and include all important factors, because the decision for a location is often associated with high costs. Avoid having to move again after a short time because you should find out that this was not the right location after all. You can use our free tool to create a location analysis.

After you've found your suitable location, it's time to get down to business. Because in addition to the location check and the obtaining of permits, you also have to take care of the equipment of your restaurant. Because in order to get off to a successful start, the choice of a menu design is just as important as a cash register system and the right interior design. In order to make your life a little easier, there are now various POS system solutions on the market that organize different sub-areas. This way, restaurateurs not only benefit from the wide-ranging know-how contained in the software, but ultimately save themselves a lot of unnecessary stress and money, so tasks can be organized more efficiently or given away with a clear conscience, without losing track of things.

# 6 Follow the rules when starting a hospitality business

Take into account the following legal peculiarities and do not forget that you must already have the necessary licenses to start your business start-up in the catering industry:

  • Restaurant permit
    A restaurant permit is required to serve alcoholic beverages, which you usually have to apply for at the trade or regulatory office. Numerous other documents are required for this, which you should find out about in advance of setting up in the catering industry. You can find more detailed information in the section Individual requirements.
  • Trade inspection
    There are numerous regulations governing hospitality premises. The trade supervisory authority is often the right contact here.
  • Structural changes
    In the event of structural changes or a different use of the rooms than before, you must absolutely contact the responsible building authority.
  • Health department
    Also visit the health department. Here you and your employees can obtain health certificates.
  • Hygiene regulations
    There are strict hygiene regulations in gastronomy that you should absolutely adhere to.
  • training
    At the IHK, a catering course may have to be completed.
  • Prices
    There are also special features when it comes to awarding prizes, fees for music, TV or video played (registration with GEMA).
  • Further legal provisions
    Also note the applicable smoking ban and the provisions of the Youth Protection Act.

Establishing a restaurant business involves a number of formalities. Before founding a company, find out what you need for a legally secure and successful catering business.

# 7 Get essential insurance for your hospitality business

The right commercial insurance is important when starting a business. Because accidents happen everywhere, including in the catering industry. You should therefore ensure that your establishment is adequately secured in good time and also for damage caused by third parties. If you have employees, you are also subject to statutory accident insurance. There are insurance policies for many risks that you cannot influence, so that the financial consequences of possible damage do not mean an early end. But which insurance is worthwhile in the catering industry? Do the needs analysis.

# 8 Register your hospitality business and get noticed

As soon as you start your own business in the catering industry, you have to register your company. As with almost every topic, there are plenty of guidelines and regulations that must be adhered to and fulfilled when registering a business. Because all gastronomic trades require a permit and, unlike other start-ups, a simple trade license is not sufficient. That means: if you want to get into the catering industry, you need a catering license. Who gets such a restaurant permit and which requirements it is bound to is stipulated in the Restaurant Act (GastG). After registering your business, you can finally get started with advertising: an absolute must if you are registering a restaurant business. The “new media” are an important addition to traditional advertising such as newspapers and radio spots.

Here is a short checklist with suggestions for your restaurant marketing via online media:

  • The website is the business card of your restaurant: Put the restaurant, the environment, the food and the team in the limelight. Acquire guests directly via a reservation tool.
  • Use review portals such as TripAdvisor: present yourself there with a profile and motivate your guests to give positive reviews.
  • Use a Google My Business profile: this is like your restaurant's calling card on the Google search results page. As a rule, the Google My Business profile is seen 3 to 4 times more often than you have visitors on your website. You can also advertise offers and events in your local area there. You are also automatically entered on Google Maps with the Google My Business entry.
  • Check social media channels such as Facebook, Instagram, Twitter or Youtube. You do not have to and cannot be present on all of these channels. But if you show presence, you should do it consistently.

Before the opening, you should also send out a corresponding press release with good visual material. The more that is reported about your new establishment, the better.

With these 8 steps you are on the right path to successfully start up in the hospitality industry. Always remember: opening a restaurant is not a sprint. And even a marathon is sometimes not enough. Perseverance is the order of the day in order to successfully survive the start-up phase of your restaurant.

A modern cash register system is more than just a storage facility for coins and banknotes. Read here the advantages and which POS system is the right one for your catering business.

Professional POS system

6. Conclusion on founding in the catering industry

For a successful start-up in the catering industry, you absolutely need a business plan and a concept that promises success. These should be carefully considered and include points such as target group and competition.

In addition to a convincing concept, your personality is also an important factor - ask yourself whether you have enough stamina and knowledge to get through a business start-up. The path to success in gastronomy is usually lengthy and associated with numerous hurdles. For the preparation phase alone - that is, from the idea to the finished and opened restaurant, you usually have to budget six months and complex decisions have to be made.

As an alternative to setting up an individual company in the catering industry, it is advisable to set up a franchise. Because here the franchisor already provides a tried and tested business model. Find out how to open a bar, restaurant or café via franchise in seven steps. In conclusion, it should be said that the step into self-employment with a catering trade needs to be considered very carefully. In any case, you should be fit, resilient, open-minded and healthy in order to be able to withstand the job in gastronomy.

And finally: don't forget that with the right basic equipment you can make life in the catering industry a lot easier. Select a suitable POS system right from the start or look for the right fully automatic coffee machine for your café - that will certainly put a smile on your customers' faces.

Author: Für-Gründer.de editors

As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.