F&B Business 101: Understand the Basics

On the surface, opening a restaurant or café may seem straightforward. Take a loan from the bank of 70 thousand riyals, for example, then choose a store, design a logo and some cups and papers, bring some coffee crops and suitable resources for the dishes, hire some workers, and start selling. However, it is the complete opposite. Opening a café or restaurant is delicate and requires a great planning process, just like any other type of business. If you neglect the planning stage and treat the matter as if it is very easy, you expose your business project to a disastrous failure as quickly as possible.

This article will shed light on the basics of opening a successful business project in the food and beverage sector. We will discuss the correct steps to avoid risks and loss of your business project and put you on the path to success.

We will simplify things without going into the many complexities that make them seem impossible. There are four fundamental pillars in the world of business and marketing called the 4P's:

• Product

• Place

• Price

• Promotion

This is an excellent rule that must be taken into consideration, but I want to add some details to it to be more accurate and more in line with the needs of commercial projects in the food and beverage sector, where our focus will be as follows:

• Project owner

• Market

• Potential customers

• Competitors

• Place

• Price

• Promotion

Project owner:

There is no doubt that in any commercial project in this world, the personality of the project owner, CEO, or any person placed in the position of leader has a significant impact on the commercial project, either positively or negatively, but how do you turn this impact into a positive impact? Since we are talking about the food and beverage sector, you certainly have your personal preferences as a business owner. Some of us prefer French food and pastries, others are fans of everything Italian, another group prefers fast food, and so on… Therefore, you have to search for your passion and find distinctive ways to present it as a product, either by developing it and adding your own touches to it or by developing the supporting services for it by presenting it faster, for example, in a specific dish, etc.

Market:

After you have determined your list of inclinations in the field of food and beverage, you must now search for its compatibility with the market. What you love may be widely available, making entering this market risky, or it may be the exact opposite, being in short supply, but for specific reasons such as the culture of consumption and societal traditions!

Therefore, you have to adapt your product to be in the middle and not lean towards one of the two sides to avoid exposing yourself and your business project to risks or competition.

Potential Customers:

This step is part of the market research phase, but I prefer to discuss it separately to give it its due date and the competitors phase, which we will discuss in the following steps. In your market study, you must determine who your target customers are. Where are they located? What is their lifestyle? What is their purchasing power? What are their secondary preferences? What are their interests outside the food and beverage circle? Are they individuals or entities that may buy my products in large quantities and at wholesale prices? What are the communication channels that they are most present on?

Competitors:

In military tradition, there is a saying, "He who does not know his enemy by heart, his loss in war is inevitable."

Since World War II and the emergence of the so-called global economy and the entanglement of international trade, many countries have introduced the concepts of war planning into the economy and trade as they are more like a battlefield, the only difference being that the enemy is a competitor, and you have to defeat your competitor. Therefore, entering any market without studying your potential competitors in detail is considered a madness that will expose you to endless risks and challenges. Focus on your competitor's strengths and develop strategies to overcome and excel over them to achieve "competitive advantage," which we will explain in an upcoming article. You should also focus on his weaknesses and pain points to avoid them and provide an ideal product for your audience. Study everything that may come to mind: customer service, prices, place decor, visual identity, marketing methods, products, quality, materials used, working team, technologies, etc. The more information you collect about your competitors, the stronger you become. Knowing your surroundings increases your ability to make sound decisions and reduce risks, so studying competitors is not a one-time stage that ends; instead, it is the lifeblood of your business. When you stop studying your competitors, you will stop competing, and thus you will lose. To make the subject easier, I will give you two types of competition:

1. Direct competitor: the competitor who offers the same product in the same place

2. Indirect competitor: the competitor who offers the same product but in another place or the competitor who offers another product in the same place but serves the same target customer I have

Place:

Choosing a place is essential in the sales and marketing process. Being in the right place will mean reaching your potential customers very quickly, and choosing the wrong place will increase the cost of attracting customers to you. For example, if your business revolves around providing coffee and quick breakfast to employees before going to work, it is essential to look for a geographical location close to company offices; this will make it easier and faster for the customer to reach you and always put you at the forefront of his choices, but if you open your branch in an area far from the offices, who will come to you? You may be visited by employees and students who pass by or whose homes are nearby, but that may not be enough to cover your costs. So, you must study all the available locations and choose the best one that suits your target customer.

Price:

Your product pricing depends on your marketing strategy and the product you are selling. To continue our previous example, your chosen strategy is to provide employees with quick coffee and breakfast in the morning, and you will provide a medium-quality product.

Therefore, you should reduce your costs and adopt a low-price policy by reducing the profit margin and relying on more sales. One of these types of cafes is the famous "Simplicity" cafe. However, rely on developing high-quality and innovative products and designing excellent decor that gives customers a unique experience. You may go for a cost-based pricing strategy, meaning that you calculate your fixed and variable costs and add a specific percentage to them that is considered the profit margin, or follow a high-pricing strategy to put yourself in a distinguished position in the market that gives your customers a sense of distinction and high social status, as you are not available to people with medium and low incomes. This is called "positioning," one of the fundamental pillars of the brand strategy and one of the most essential pillars of marketing. We will talk about this in detail in an upcoming article. Promotion:

Based on all the above data that have been carefully identified and built according to market studies and research that must be accurate, we will develop the appropriate marketing strategy that will give us relevant communication with our target customer. Here, we must determine the appropriate marketing messages for our business strategy. In promotion, we have two essential messages to communicate with the customer:

1. The current situation: In which we focus on clarifying the big difference that the customer will get if he tries our product

2. The future situation: In which we focus on the customer's future if he tries our product

Let's clarify this together. If our strategy in the previous examples is to provide coffee and breakfast at a breakneck speed, average quality, and competitive prices for employees in the morning, we will follow the first strategy and focus our marketing on the advantages that we will add to the customer to improve his current situation. We focus our message on the customer being an active and good employee, and our coffee and breakfast will help him maintain his brilliance and energy at work to remain distinguished as always. We may focus on the price to help the customer save money and not affect his budget significantly. Still, In the second example, in the cafe with a unique experience, with its fantastic decor and innovative products, we will focus on the future situation of the customer and how he will live a routine and experience a high social class and a status that he dreams of when he visits us and that he will have enjoyable moments that will be immortalized in his memory for the future, and if he works and studies in our place, he may become successful in the future. Through these simple strategies, we will create content appropriate for our position in the market and our brand strategy and communicate effectively with potential customers to increase our sales and maximize our profits.