After the year we've had, embarking on the launch of a new a restaurant, cafe bar or pub may seem the least favoured start-up option for entrepreneurs
However, many industry experts predict a bright future for the hospitality sector as pent-up demand among prospective diners gets ready to explode outwards. In many ways the pandemic has been a re-setter of norms, so punters can expect to see a raft of innovative, exciting F&B concepts appearing in the future.
Clearly budding restaurateurs will need to do the usual research associated with starting any business: produce a business plan, analyse costs, find suppliers, set margins and evaluate the competition. However, in this short blog, we will have a look at five key areas specific to the restaurant sector.
As with any domestic asset like a house or car, it is essential for restaurants to have the right insurance in place. Operating a business without it could be a disaster waiting to happen. Prospective restaurant owners will need to arrange:
Public liability insurance (“PLI”), which provides cover against claims should a member of the public be injured or their property damaged because of the restaurant. Examples include burns from a hot counter, falling masonry and slipping on a wet floor.
Employer's liability insurance (“ELI”)
Sooner or later a restaurant will hire staff, which comes with a legal requirement for employer's liability insurance. This particular cover protects the employer from similar risks as public liability insurance, but with a focus on staff injury or other claims. It is particularly important, because in insurance parlance staff are not considered “public” and any claims by won't be covered by PLI.
Buildings Contents Insurance
Much like domestic contents insurance, business contents insurance covers the restaurant's assets and helps ensure continuity of business in the event of critical infrastructure being lost, stolen or damaged. This type of cover is all about helping businesses get back on their feet quickly if, say, essential equipment is damaged in a fire or absent after a break-in.
Business Buildings Insurance
This insurance does what it says on the tin, really. Much like domestic policies, food buildings should be insured against damage from a variety of causes. As the physical premises are usually a key part of a restaurant's brand, this type of cover should be considered essential but it is always worth checking with a landlord to see if the building is already covered as part of the rent or lease.
Every business conducting ‘food operations’ (defined as selling, cooking, storing, preparing or distributing food) must obtain a licence from its local authority at least 28 days before the business opens.
The good news is that these are not usually very difficult to obtain and it is likely that councils will look favourably on businesses bringing life back to the high street or urban community – particularly as the government seeks an economic bounce-back from the COVID doldrums. The licence is free, but restaurants, cafe bars, pubs, take-away outlets and food stalls face big fines if they operate without one, together with imprisonment of up to 2 years for their owners.
Every food-oriented business must have a food hygiene certificate issued by the Food Standards Agency. They are issued after a visit from the FSA's inspectors and give customers information about the business's hygiene standards.
For new food businesses the inspections are often a great way to better understand what is required to operate safely and are conducted on a “show and tell” basis. At the end of the inspection a certificate will be issued (which must be displayed) which rates the business between one and five, the owner having been told what needs to be done to improve. Areas covered include cleaning, cooking, chilling, handling, storage, cross-contamination, allergens, personal hygiene and labelling.
It is worth pointing out that the FSA's inspectors are normally very supportive towards new businesses and have a wealth of knowledge. They will often take a pragmatic view towards a restaurant's journey towards a five star rating, but frequent transgressors will feel the full force of the law.
Unsurprisingly, the laws around serving alcohol are strict, with a firm regime in place to ensure responsible drinking and best practice. Although the process of obtaining the required certification has many steps, it isn't particularly onerous. Here are the basic steps a food business must take to be legally permitted to serve customers their favourite drinks:
Apply for a licence from the local authority, having submitted a number of operating plans such as opening hours. The application then needs to be displayed publicly on the premises for 28 days;
All premises serving alcohol must have a Designated Premises Supervisor, or “DPS”. The DPS is ultimately responsible to the authorities for the responsible and lawful provision of alcohol, so it is important the right individual is appointed.
Restaurateurs will need to decide early-on in the process who this person will be, as the proposed DPS must hold a Personal Licence for the provision of alcohol, which itself can only be obtained after the individual has completed a course towards, and been accredited with, a relevant qualification. There are a number of providers, but the BIIAB course and examination are popular.
Once the proposed DPS has completed the course and obtained the qualification, the Personal Licence can be applied for as above and the individual formally appointed as the DPS.
Once the premises licence has been granted and the DPS approved, the restaurant must display the licence prominently in the restaurant.
Restaurants which feature music of any kind, from telephone hold tunes to the top ten on the radio in the kitchen must hold a music licence. It doesn't stop there, however, because piped background music also requires the licence, as does any kind of public performance of live music.
The licence is there to provide revenue to the composers, distributors and performers of the music – those who have invested in it – and without it a restaurant will risk infringing copyright. Licences are applied for online via https://pplprs.co.uk/restaurants-cafes-themusiclicence/ with the fee depending on the size of the business and its audible area.
And finally, we wouldn't be doing our job if we didn't briefly mention the importance of technology in restaurants. Web-based restaurant management systems might not be high on the agenda when setting up a business, but if the last eighteen months has taught us anything it's that customers expect a technology-rich experience when dining out – and never more so than now.
Even with the eventual lifting of restrictions, customers are likely to choose restaurants which have robust systems in place to ensure capacity management, distancing and contactless ordering and payment. To cover this, the best systems have easy to use functionality and are not expensive (unless they charge the restaurateur a commission).
It can be reasonably argued that anyone setting up a new restaurant, cafe bar or pub in 2021 is doing so at the right time, when norms have been re-set and demand will be high. Having produced the usual start-up checks, new food-oriented businesses will need to pay attention to some critical legislative and compliance areas, plus indemnify themselves against a range of unforeseen circumstances and have a touch of tech.
Those that get it right will be entering a vibrant and rewarding sector, primed for growth. We wish them well.
favouritetable is the leading technology provider for food an drink businesses in the UK. For over a decade, favouritetable has provided world-class and easy-to-use systems to enable restaurants, pubs, bars and other businesses to maximise their revenue.
Call us today on 033 0124 4785 or email us at firstname.lastname@example.org and we will be delighted to demonstrate what you will achieve with the right technology.