by Table of Contents
Food-based businesses are one of the most lucrative ventures that you can undertake.
In the Philippine market specifically, food cart businesses have emerged to be an extremely profitable segment due to increasing demand for on-the go and cheap food.
Its popularity is evident. Just go to malls and foodcourts in Manila and you’d see hundreds of food carts lined up in every floor. You’d also see variety of them in LRT or MRT stations, school kiosks and even in the streets!
With its popularity as an “evergreen” niche, comes with a fiercely competitive market. It’s definitely not a walk in the park if you do not have prior experience in running a food business or if you’re starting out with a limited capital.
Not to scare you off or anything, but the real truth is that it’s an extremely cut-throat business. Becoming a franchisee of a well-established food-cart brand can also be very risky.
But while it’s also true that the market is also very saturated, there is still a massive opportunity for entrepreneurs in this category.
To help you out, here are some tips on how to start a food cart business in the Philippines.
1. Make a business plan
Every business should have a business plan, and I can’t stress the importance of this enough.
Most “wantrepreneurs” just dive in straight ahead without proper planning. Thinking of a product or food offering simply isn’t enough. You’d have to take in consideration the following factors:
- Feasibility of the business plan
Feasibility takes into consideration all variables, resources and constraints needed to start your business. These include factors like budget, cash flow, deadlines, suppliers, and ability to scale.
List down your costs (which includes initial inventory and equipment). Check your starting capital and liquidity and see if it’s enough to cover your costs. How fast will you be able to recuperate your initial capital? What is the return on investment?
What are your deadlines? Will you be able execute all those tasks alone or do you need to hire staff for daily operations of your business? Do you have a capital to pay for the salaries of your team? etc.
To take the franchising route? or to build a brand?
If you’re planning on becoming a FRANCHISEE of an already established food-cart brand or business, take into account all the possible risks associated with it.
Initially, the franchisor will guide you along the way and give you a blueprint of how to run the food cart business. But, it comes with a relatively high cost. Some franchisors take a percentage of your monthly profit. Do a cost-benefit analysis for a one (1) year period, two (2) year period, and so on. Will it be more profitable in the long-term? What is the ROI for the franchising model?
- Scaleability of the business
Is your food cart business scaleable? And by scaleability we mean opportunities for expansion. Will your budget, cash flow and liquidity be able to handle an increase in demand? Can you replicate the business to other locations as well?
- Mission and Vision
What is the purpose of starting a food cart business? How do see your food cart business in the next 5 years? What will be the steps that you’d have to undertake in order to achieve that vision?
2. Conduct a proper market research
Conducting a proper market research ensures that your product offering is fit for your target demographic. It should be according to their tastes, preference, and budget point.
After all, the business is not about you- it’s about your customers.
Segment the population according to demographics like age, education, income and mobility. Doing this will help you target your customers more accurately.
For example, if you’re planning to set-up your food-cart business along the LRT Recto 2 station. Think of the possible target demographic in that area.
This demographic could be ages 18-65, middle income earners, students along the university belt (U.E, CEU, UST, Arellano) going to the Divisoria area to Quiapo Manila. They’re on the go and would like a cheap and quick fix for their hunger. They have limited disposable incomes and probably won’t spend more than 100 pesos in kiosks.
Determine how fast they want their food to be served. If your customers are on-the go, they wouldn’t want to stand there in minutes just to wait.
Even if your food-cart business is supposedly a miniature fast-food style of business on steroids, you’d still have to take into account the overall ease and experience of your customers.
3. Pick your food offering according to your demographic’s tastes
Once you’ve determined your target demographic’s tastes, preferences and budget. Make a list of potential food offerings that you’d want to include in your food-cart.
With the process of elimination, choose the products that are the most feasible, least costly to procure, easiest to make, and the most delicious for your customers.
Remember, food-carts have one (1) specialty. You have to be the to-go to place or the “first-in mind” brand for a quick fix. As an example, the most popular food cart businesses out there are siomai kiosks, shawarma food-carts, hong-kong noodle kiosks, etc. They’re known for one specific food.
The more products you offer, the more complicated and more time consuming it will be to operate as well.
Instead of offering different varieties of food, you can just opt to offer complimentary food and beverages. Think of budget meals, or buy one take one offerings.
4. Choose a high-traffic location
In the food-cart business (and as with most brick and mortar) stores, location is everything!
Even if you make the most delicious food offerings out there, still, the primary factor that can make or break your food-cart business is location.
You’ll only succeed when your food-cart is located in a highly visible, easily accessibly and high foot traffic area.
You are not a restaurant where your customers will opt for a full-dining experience. Instead, your demographic is most likely seeking for a quick-fix for their hunger, so they won’t spend minutes of their waking life looking for your kiosk.
Food-cart businesses also leverage on their customer’s impulsivity. And being located in a highly visible and accessible area will help you gain more customers that had just seen your cart in first glance.
5. Get a business permit
Before you’d be allowed to operate your food-cart business, you are required to register your business with the DTI and you’d have to get a permit from the mayor’s office in the city hall where your business will be located.
You’ll also need a TIN from the BIR and you’ll have to show a lease contract.
Pooling all the necessary requirements and documents aside from the actual application process can take a while. Expect long lines when going to government offices. Bring patience. You’d need it the most.
6. Make sure that your food-cart stands out
If you didn’t choose the franchising route, you’ll have more flexibility when it comes to the design and branding of your food-cart business.
It’ll take a more considerable time of planning, however, because you’d have to take into account the “brand image” that you want your customers to perceive.
It’s always best to choose bright and colorful logos, slogans and color schemes for your food cart business. Colors like yellow and red conjure up excitement and impulsivity from your customers and I think it’s ideal for a food-cart business.
You want your food-cart to stand out amongst the competition, and your menu should be very visible as well.
Placing a huge tarpaulin that lists all your products in front of your food cart also helps because your customers will be able to see it even from meters away.
7. Market your food-cart business
If you’re just starting out, it’s incredibly important to do marketing for your business (or for any business, really).
Treat your food-cart business as a brand. A brand that is valuable and grows in popularity in the long-term. You don’t want to be just a “siomai house”, you’d want it to become an identifiable brand that you can scale and replicate in other locations as well.
Some marketing strategies to help get the word out about your business are:
- distributing flyers if you’re starting out helps.
- making social media fan pages like facebook fanpage, instagram fan page, or even a youtube account
- join trade fairs and distribute samples of your products
- make your product offerings available in online delivery platforms like Grab and Foodpanda
8. Be a hands-on entrepreneur
The success of your food-cart relies heavily on your personnel. They’d be the main point of contact with your customer and your staff’s work ethic will greatly affect your customer’s experience with your brand.
If your staff isn’t motivated, they’d work slowly, causing your customers to wait. I’ve seen in happen to a lot of food-cart businesses. The food is good but the staff isn’t approachable, the waiting time is long, and there’s a ridiculously long line. Yikes. It’s a recipe for disaster.
Be a hands-on entrepreneur to solve this problem. And by hands-on, I didn’t mean that you should run your business 24/7.
By hands-on, I meant, you should actively train and educate your staff about customer experience, food preparation, proper handling of food, hygiene and sanitation.
Always visit your store and monitor the inventory levels yourself. Check for customer reviews in your facebook pages. Incentivize employees that work well in order to motivate them to work harder.
