Starting a deli can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful deli.
Importantly, a critical step in starting a deli is to complete your business plan. To help you out, you should download Growthink’s Ultimate Business Plan Template here.
14 Steps To Start a Deli:
- Choose the Name for Your Deli
- Develop Your Deli Business Plan
- Choose the Legal Structure for Your Deli
- Secure Startup Funding for Your Deli (If Needed)
- Secure a Location for Your Business
- Register Your Deli with the IRS
- Open a Business Bank Account
- Get a Business Credit Card
- Get the Required Business Licenses and Permits
- Get Business Insurance for Your Deli
- Buy or Lease the Right Deli Equipment
- Develop Your Deli Marketing Materials
- Purchase and Setup the Software Needed to Run Your Deli
- Open for Business
1. Choose the Name for Your Deli
The first step to starting a deli is to choose your business’ name.
This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your deli:
- Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also check to see if a suitable domain name is available.
- Keep it simple. The best names are usually ones that are easy to remember, pronounce and spell.
- Think about marketing. Come up with a name that reflects the desired brand and/or focus of your deli.
2. Develop Your Deli Business Plan
One of the most important steps in starting a deli is to develop your business plan. The process of creating your plan ensures that you fully understand your local market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.
Your business plan should include the following sections:
- Executive Summary – this section should summarize your entire business plan so readers can quickly understand the key details of your food business.
- Company Overview – this section tells the reader about the history of your deli and what type of deli you operate. For example, are you a sandwich deli, ethnic deli, grocery deli, or a take-out deli?
- Industry Analysis – here you will document key information about the deli industry. Conduct market research and document how big the industry is and what trends are affecting it.
- Customer Analysis – in this section, you will document who your ideal or target market are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
- Competitive Analysis – here you will document the key direct and indirect competitors you will face and how you will build competitive advantage.
- Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
- Product: Determine and document what products/services you will offer
- Prices: Document the prices of your products/services
- Place: Where will your business be located and how will that location help you increase sales?
- Promotions: What promotional methods will you use to attract customers to your deli? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization and/or social media marketing.
- Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
- Management Team – this section details the background of your company’s management team.
- Financial Plan – finally, the financial plan answers questions including the following:
- What startup costs will you incur?
- How will your deli make money?
- What are your projected sales and expenses for the next five years?
- Do you need to raise funding to launch your business?
3. Choose the Legal Structure for Your Deli
Next you need to choose a legal structure for your deli and register it and your business name with the Secretary of State in each state where you operate your business.
Below are the five most common legal structures:
1) Sole proprietorship
A sole proprietorship is a business entity in which the business owner and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.
A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a deli together. The partners share in the profits and losses of the business.
The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.
3) Limited Liability Company (LLC)
A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a deli include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.
4) C Corporation
A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a deli is that it offers limited liability to its owners. This means that the deli owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.
5) S Corporation
An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.
Once you register your own business, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.
4. Secure Startup Funding for Your Deli (If Needed)
In developing your deli business plan, you might have determined that you need to raise funding to launch your business.
If so, the main sources of funding for a deli to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a deli that they believe has high potential for growth.
5. Secure a Location for Your Business
When starting a deli, look for a location that is in a busy area with a lot of foot traffic. It’s also important to find a space that is big enough to accommodate your deli’s menu items and seating. You don’t want to be cramped for space. Finally, make sure the rent is affordable.
6. Register Your Deli with the IRS
Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).
Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.
Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
7. Open a Business Bank Account
It is important to establish a bank account in your deli’s name. This process is fairly simple and involves the following steps:
- Identify and contact the bank you want to use
- Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address)
- Complete the bank’s application form and provide all relevant information
- Meet with a banker to discuss your business needs and establish a relationship with them
8. Get a Business Credit Card
You should get a business credit card for your deli to help you separate personal and business expenses.
You can either apply for a credit card through your bank or apply for one through a credit card company.
When you’re applying for a credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.
Once you’ve been approved for a credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
9. Get the Required Business Licenses and Permits
A business license and a food handler’s permit are both necessary to start a deli. You may also need a zoning permit depending on the area. In addition, you’ll need to comply with the local health department and safety regulations for the food service industry.
10. Get Business Insurance for Your Deli
The type of insurance you need to operate a deli may vary depending on your location and scope of operations.
Some business insurance policies you should consider for your deli include:
- General liability insurance: This covers accidents and injuries that occur on your property. It also covers damages caused by your employees or products.
- Workers’ compensation insurance: If you have employees, this type of policy works with your general liability policy to protect against workplace injuries and accidents. It also covers medical expenses and lost wages.
- Commercial property insurance: This covers damage to your property caused by fire, theft, or vandalism.
- Business interruption insurance: This covers lost income and expenses if your business is forced to close due to a covered event.
- Professional liability insurance: This protects your business against claims of professional negligence.
Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
11. Buy or Lease the Right Deli Equipment
You will need a refrigerator, a stove, an oven, and a sink. You will also need a cutting board, knife, and slicer. In addition, you will need pans, pots, utensils, and dishes. You may also want to invest in a commercial dishwasher. Finally, you will need signage to let your customers know what is being served.
12. Develop Your Deli Marketing Materials
Marketing materials will be required to attract and retain customers to your deli.
The key marketing materials you will need are as follows:
- Logo: Spend some time developing a good logo for your deli. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
- Website: Likewise, a professional deli website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
- Social Media Accounts: establish social media business accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your deli.
13. Purchase and Setup the Software Needed to Run Your Deli
To run a deli, you need a cash register, a food scale, and a computer with a point of sale (POS) software program. The POS software program will help you keep track of your sales and inventory. You may also want to consider using a kitchen management system to help manage your kitchen operations. Additionally, you may want to purchase a customer relationship management (CRM) program to keep track of your customers.
14. Open for Business
You are now ready to open your deli. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
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How to Open a Deli FAQs
Is it hard to open a deli?
No, opening a deli is not hard. All you need is some basic knowledge about the food industry and how to run a business. You'll also need to invest in some necessary equipment and ingredients.
How can I start a deli with no experience?
The best way to start a deli with no experience is to do your research. Read books, articles, and websites about the industry. You may also want to talk to people who have owned or worked in a deli. You can attend trade shows and workshops to learn more about the industry and network with deli owners. Once you have a good understanding of what it takes to run a deli, create a business plan. This will help you outline your goals, strategies, and financial projections.
What type of deli is most profitable?
The most profitable type of deli is a sandwich shop. This is because they offer a wide variety of sandwiches, which allows them to appeal to a large number of customers. They also have a lower overhead cost than a full-service restaurant, which allows them to charge lower prices while maintaining a healthy profit margin.
How much does it cost to start a deli?
The cost to open a deli can vary depending on the type of deli and the location. In general, the cost to open a deli can range from $10,000 to $100,000.
What are the ongoing expenses for a deli?
There are a few ongoing expenses for a deli. The primary expense is the cost of the ingredients. Additional costs include those associated with running the business, such as utilities, rent, employee salaries, and insurance.
How does a deli make money?
A deli makes money by selling food and drinks to customers. Successful delis also make money by renting out their space for special events and selling products for take out.
Is owning a deli profitable?
Yes, owning a deli can be profitable because they can offer a variety of foods, allowing customers to find something they will enjoy. Additionally, a deli in the right location can be a convenient stop for people who are on the go and need to get a meal quickly.
Why do delis fail?
There are many reasons delis can fail, but one of the most common is a lack of proper planning and organization. Delis typically require a lot of inventory, and if that inventory is not managed properly, it can lead to waste and loss of revenue. Furthermore, delis need to be able to keep up with customer demand, which can be difficult if the staff is not adequately trained or if the kitchen is not properly organized.